Wednesday, 23 April 2014

Právo: Hundreds of Czechs losing home over debts

ČTK |
7 January 2013

Prague, Jan 5 (CTK) - Hundreds of Czechs annually lose a roof over their heads since they are not able to pay off their loans and mortgages, daily Pravo writes Saturday.

The number of cases in which the debtor's house or flat is seized and auctioned off has been constantly rising. Last year it was over 900, a 17-percent year-on-year rise, Pravo adds.

Most of such auctions are initiated by banks if their clients have no money for installments.

Yet, people are trying to pay off their mortgages as long as they can and they even take further loans from non-banking institutions and even usurers to do so, Pravo writes.

However, they mostly only postpone the auction. Besides, their house is auctioned off for a lower price than if they sold it alone and the money from the sale is demanded by other creditors from whom they borrowed money for bank installments, Pravo adds.

Moreover, they still owe some money to the bank as the real estate auctions Saturday usually cover only 70 percent of the debt, Pravo writes, adding that the market prices of houses and flats are decreasing and the demand is not so high either.

Many flats have to be offered in auctions repeatedly and their selling prices are plummeting.

Analysts point out that it is no longer true that people end up with high debts since they have taken loans for holiday or Christmas gifts carelessly.

"Real incomes are actually decreasing. The household consumption will continue to fall. The construction industry, IT, advertising and real estate business have not yet hit the bottom," CSOB bank analyst Petr Dufek told Pravo.

The national average gross monthly pay is now some 24,300 crowns but people working in small firms with under 20 employees earn only 17,500 crowns before taxation, Pravo recalls.

Unemployment has been constantly rising and it is to reach 10 percent on average in the country this year, it says.

If the people with a mortgage lose jobs, they are threatened with poverty. If they are not able to pay bank installments any more, their house or flat may be auctioned off within a couple of months.

More and more Czechs are also eliminated from the unemployed register after six months and are not entitled to unemployment benefits any more though they have not found a job, the paper notes.

One in ten Czechs will face "income poverty" (having up to 9000 crowns a month) this year, that is 1.1 million people in the 10.5-million Czech Republic, Pravo writes.

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