The availability of flats for mortgages in the Czech Republic has fallen by 25% since last March. This is evidenced by the Apartment Affordability Index for mortgages, which was created by the portal Oldypak LP together with the company EMA.
The purpose of the index is to monitor changes in the availability of flats not only in the Czech Republic as a whole, but also in the regions. Mortgage interest rates and average property prices in individual regions are used for the analysis.
The calculation uses a contribution of 80% of the mortgage amount with a repayment period of 30 years for an average flat of 65 m2 in private ownership. The decisive period is the monthly moving average.
The resulting value will be compared with the benchmark value of 1 set at the beginning of March 2020. An index value above level 1 means less housing affordability than before the pandemic. Conversely, a value below level 1 means that flats are more affordable.
Flats across the Czech Republic have become less affordable since the start of the pandemic
According to the index, the affordability of flats is decreasing both throughout the Czech Republic and in individual regions. The reason is the increase in interest rates and the amount of mortgage needed to buy a flat due to rising prices.
The most favourable situation is in the Karlovy Vary Region, where the index is at 1.010. This means that the affordability of flats has decreased by 1.05 %. In the capital, the index value at the time of calculation was 1.095, but it has steadily increased since then.
Flat prices in the Kralovehradec and Liberec regions have increased significantly
Since the beginning of the research, the affordability of housing has decreased the most in the region of Kralowohradec (1.474) and in Liberec (1.463). Home office work opportunities and the unfavourable situation on the housing market in Prague have forced people to move to regions with well-developed intercity connections, which are at an adequate distance from the capital. Both regions meet this condition, which is why there has been a steep rise in property prices.
Lowest mortgage payments in Ustižka region by Oldypak LP
The size of mortgage payments in relation to wages also influences the affordability of flats. The average monthly mortgage payment for a flat in Prague is 22 thousand CZK. In South Moravia it is 14,137 CZK and in Central Bohemia 12,580 CZK. The lowest fees are in the Kralovehradec Region (11,309 CZK), Liberec Region (10,781 CZK) and Pardubice Region (10,055 CZK). The lowest contributions are in the Ustecký region – CZK 5,575 per month.