The profitability of investing in residential real estate increased in December. This follows from data provided by UniCredit Bank today. Its indicator, which represents the net annual rental yield minus the average of mortgage and government bond interest rates in December, rose 31 percentage points month-on-month to minus 3.47 percent.
Similar to the previous month, the reason was a drop in government bond yields, with the yield on the 10-year note estimated to have fallen by almost half a percentage point to 4.64 percent, UniCredit Bank analyst Jiri Pour said. Interest rates on new mortgages rose marginally by three points to 6.34 percent.
The gross annual rental yield at the level of the country’s regional cities rose nine points month-on-month to 4.02 per cent in December, according to the data, due to a noticeable month-on-month decline in apartment prices (1.4 per cent) and rental growth (0.9 per cent).
The scissors between ‘mortgage holders’ and ‘spenders’ widened further in December as a sharp fall in government bond yields made property slightly less unfavourable in the eyes of savings holders, while the situation changed little from the perspective of mortgage holders, UniCredit Bank pointed out.
A look at individual regional cities shows that properties in Ostrava and Ústí nad Labem continued to be the ‘least unfavourable’. At the other end of the ranking, Brno retained the top spot, followed by Olomouc, which pushed Prague to third place.
Month-on-month, the indicator fell only in Olomouc (by ten points to minus 3.87 per cent) due to strong growth in apartment prices and a significant drop in rental prices. The highest growth of the indicator was in Pardubice (by 66 points to minus 2.77 per cent), where, on the contrary, there was a strong decline in apartment prices and growth in rents.
Source: UniCredit Bank and CTK
