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Rents rising due to higher demand for rentals

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Demand for rental flats across the country is growing as mortgage loans become more difficult to obtain.

 

Rental housing in the Czech Republic is booming. Several major real estate agencies confirmed to HN that demand for rental flats has been growing considerably. As a result, rents started to grow sharply.

In Plzeň, for example, rents have increased by a quarter over the last twelve months. A standard three-room flat in a brick building costs as much as CZK 10,000 a month. Prices in Hradec Králové and České Budějovice are growing at a two-digit pace as well. “On average, rents in the regional centres have increased by CZK 500,” said Petr Illetško, director of the real estate agency AAABYTY.CZ. After a while, market rents also started to rise in Prague. “We recorded roughly 5% growth in October,” said Milada Kadlecová of the IRI institute for regional information that monitors rents in the Czech Republic on a regular basis.

Czechs are returning to rental housing in connection with the impact of the global financial crisis that has made access to mortgage loans more complicated. Banks raised interest rates at the end of last summer and require higher income from mortgage seekers. Many banks are no longer providing no-deposit mortgage loans. Another factor is that people started to believe that flat prices will decrease. “People think that the prices of flats will go down further. They prefer to rent a home for six months or for a year,” said Michal Pitucha of the company Sting that rents out flats all across the country. Client numbers at Sting have increased by about a quarter compared to a year ago.

The interest in rental flats is now huge. “In the past, they had been on offer for months, and now there are even several bidders,” said Jiří Pácal of Central Europe Holding.

Demand for rental housing may continue to grow. “People will not be able to afford mortgages, but will need a place to live,” Jiří Fajkus of Real Spektrum said.

However, the development in rents will also depend on politicians to a certain extent. The planned rent deregulation will make more flats available on the market, which could halt rent growth.

Translated with permission by the Prague Daily Monitor.

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