The International Herald Tribune (IHT) reports that the residential property market in Prague has matured and no longer the attraction of gold field for property investors. The article says that annual returns at 5% are still a little higher than for Western European markets and that the Czech Republic presents some sound investment propositions, especially at the higher end of the property range. This contrasts with the rosier picture painted by Property Secrets in mid-January which forecast growth rates of 20% for Prague and 15% for Brno ( the country’s second city) in 2007.
The RICs report (pdf)on European residential property confirms that the high end of the market is the most promising – note that the Czech republic has had the lowest level of house price inflation among smaller European countries in 2005/6). Mortgage rates are currently at around 3.8% for a one year fixed rate mortgage or 4.45% for a five year fixed rate mortgage.
The country’s interest rates trend is very uncertain with the possibility of further rises to stave off inflation and a further slide against the Euro (read Bloomberg article here). Mortgages are available in Euros or Crowns (Czech Koruna) but, given the exchange rate situation, a local currency mortgage may be a safer commitment. The longstanding legal requirement for foreigners to purchase property by means of a Czech registered company is now being repealed to meet EU requirements.