Czech Cottages Outperform Wall Street Investors in Five-Year-Returns

Who is better, an investor on Wall Street or a Czech cottager? Of course, it depends on the point of view. At this point, however, we usually analyze returns, appreciation, simply percentages, and in recent years, the moss over them has clearly been a Czech cottager.

Let’s count together and add up all the pros and cons. A stockbroker on Wall Street has never had dirt under his fingernails in the last five years, which certainly counts as a significant non-financial return. If he invested in an instrument corresponding to the structure of the S&P 500 index, he earned roughly 55 percent over the mentioned period. Since the dollar is now almost exactly as expensive as it was five years ago, we do not need to adjust the yield for the exchange rate effect. What we have to include is Czech inflation. From April 2018 to April this year, money in the Czech Republic depreciated by exactly 40.5 percent. The real five-year appreciation is thus 14.5 percent. Spread using the CAGR method for annual return, this means 2.75 real appreciation per year. Does that seem like a lot?

The Czech cottager laughs it all off and has a glass of champagne on the porch of his property. Unlike a stock investment, which does bring a significant dose of daily excitement, or, if you prefer, fatal stress on the verge of a heart attack, the real benefit of using a cottage can be difficult to argue with.

But let’s get to the percentages. According to SReality data, the cottage in the Central Bohemia region appreciated by 124 percent from April 2018 to this year. So in real terms by 83.5 percent, which corresponds to an annual return of 13 percent per year. Thus, over the past five years, the Central Bohemian cottager has achieved an annual real return of almost five times that of an investor on Wall Street.

So why talk about American stocks when we can talk about Czech cottages? They have undergone an annual price correction, because in the spring of last year they were even more expensive. Expensive mortgages, energy, in short, everything in general was simply not conducive to fun like barbecues at weekend haciendas.

Although the world is still a very imperfect place to live in after a year, in some ways – excuse the hackneyed cliché – there are glimpses of better times. Starting with the vision of cheaper mortgages, through the loosened limits for the amount of their monthly installments, to the apparently odd threat of an intense Czech recession. All of this will eventually bring people back the desire to buy and invest in vacation properties. Today we will answer the question: Where in the Czech Republic within reach of the capital have cottages become cheaper and where can they represent the best investment?

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