Around 400,000 refugees from the war will come to the Czech Republic. The demand for rents will thus jump significantly. In addition, many Czechs are postponing the purchase of their own real estate due to higher prices. Result? Rising prices will rise by up to 30 percent in the next two years, writes the consulting company Cyrrus.
Rents in the Czech Republic will increase by approximately 30 percent over two years. The war in Ukraine will cause higher inflation, tighter monetary policy and a slowdown in housing construction, thus speeding up the transfer of Czechs to rents. A wave of refugees from Ukraine will bring further pressure for more expensive rents. As a result, demand for rents will rise by a fifth this year. This follows from Cyrrus’s analysis.
“Even before the start of the war in Ukraine, it was clear that the Czechs were waiting to move to rental housing. The war will further accelerate this process. While before the start of the war we expected rents to grow by a total of 20 percent in 2022 and 2023, taking into account the effects of the war, we are now leaning towards faster dynamics of around 30 percent, “said Chief Economist Cyrrus Vít Hradil.
Cottage for the price of a smaller apartment in Prague? In reality, at the price, prices jumped double
Cottage prices have doubled in the last two years since the Czech-19 epidemic hit the Czechia. This year, real estate agents expect stagnation or only a slight increase in holiday property prices affected by inflation.
400,000 refugees will go to the Czech Republic
Current forecasts indicate that the number of war refugees from Ukraine heading to the Czech Republic could be around 400 thousand, a significant part of them will remain permanently in the country. According to the analysis, this fact will result an increase in the required number of rental flats in the Czech Republic in 2022 by approximately 60,000, ie about a fifth above the standard level. This demand does not currently have a counterpart in the market, although the Czech housing fund has this capacity – however, an increase in rental prices will be necessary to release it on the market, the analysis shows.
Concerns about future price increases and uncertainty about their own economic situation are likely will force a significant number of Czechs to postpone the purchase of their own real estate and stay rented. As the European Commission’s Consumer Mood Survey shows, The Czechs’ expectations of their own financial situation deteriorated over the next 12 months to the lowest level since 1998. On the contrary, the highest since the same period are currently concerns about further price increases.
This will hurt. Food prices are rising fastest in history due to the war
Global food prices were rising before the war in Ukraine. In March, however, their growth picked up a dramatic pace and food rose by an average of 13 percent. In the last two years alone, however, the increase is 75 percent.
According to Hradil, it already suffered before the war Czech construction industry with strong cost pressures, which made new buildings and reconstructions more expensive. The outflow of workers from Ukraine, who decided to return to their homeland in order to defend it, has now added to the rapidly rising materials, he said.
“More detailed data on the total outflow of workers from the Czech construction industry are not available, but according to our estimate, approximately five percent of the workforce could have disappeared from it due to the war. Its absence in the coming months will be reflected in slower and more expensive construction, and thus in rising purchase prices, “Hradil pointed out.
The volume of mortgages fell by almost a quarter in February, CBA statistics show
In February, banks and building societies provided mortgage loans worth 25.1 billion crowns, which is a decrease of 23 percent compared to January. This follows from the statistics of the Czech Banking Association (CBA) Hypomonitor. Interest rates continued to rise.
Pavel Fiala: Europe brings core and coal back into play. The Czechia reliably relies only on Dukovany
The war in Ukraine has turned European energy upside down. Russian gas has become both risky and undesirable. Risky because it can stop flowing from day to day, undesirable because it helps Putin finance a “special operation.” European countries are therefore desperately looking for a way to replace blood-stained fuel as quickly as possible. Nuclear and even coal taboos are gradually falling. Many countries are already doing “something”, the Czechia is only unnecessarily delayed, writes Pavel Fiala, Chairman of the Board of Directors of the Mining Union.
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