International Property News
Czech Rents rising due to higher demand for rentals
21st November 2008
Demand for rental flats across the country is growing as mortgage loans become more difficult to obtain.
Rental housing in the Czech Republic is booming. Several major real estate agencies confirmed to HN that demand for rental flats has been growing considerably. As a result, rents started to grow sharply.
In Plzen, for example, rents have increased by a quarter over the last twelve months. A standard three-room flat in a brick building costs as many as CZK 10,000 a month. Prices in Hradec Králové and Ceské Budejovice are growing at a two-digit pace as well. "On average, rents in the regional centres have increased by CZK 500," said Petr Illetko, director of the real estate agency AAABYTY.CZ. After a longer time, market rents also started to rise in Prague. "We recorded roughly a five per cent growth in October," said Milada Kadlecová of the IRI institute for regional information that monitors rents in the Czech Republic on a regular basis.
Czechs are returning to rental housing in connected with the impacts of the global financial crisis that has made assess to mortgage loans complicated. Banks raised interest rates at the end of last summer and require higher incomes from mortgage seekers. Many banks are no longer providing no-deposit mortgage loans. Another factor is the fact that people started to believe that flat prices will decrease. "People think that prices of flats will go further down. They rather rent a home for six months or for a year," said Michal Pitucha of the company Sting that rents out flats all across the country. Client numbers at Sting have increased by about a quarter against a year ago.
The interest in rental flats is now huge. "In the past, they had been on offer for months, and now there are even several bidders," said Jirí Pácal of Central Europe Holding.
Demand for rental housing may continue to grow. "People will not be able to afford mortgages, but will need a place to live," Jirí Fajkus of Real Spektrum said.
However, the development in rents will also depend on politicians to a certain extent. The planned rent deregulation will make more flats available on the market, which could halt the rent growth.
Source: Prague Monitor