ČSOB Group believes that apartment prices will likely correct 10% this year, giving a much-needed cool-off to Czech Republic’s red-hot real estate market. 

Jan Sadil, on ČSOB’s Board of Directors, told Aktualne that 2020’s real estate rally was largely due to record low interest rates which have been “basically in freefall since April.” 

2020 saw a record number of mortgages given out by Czech banks, surpassing its previous record by 38%, while the average monthly mortgage payment decreased by CZK 800. Financial institutions provided over CZK 315 billion in housing loans.

Jiří Feix, CEO of Hypoteční banka, said that the economic fallout from the COVID-19 restrictions made many people want to protect their savings by dumping them into the safe haven of real estate.

“People consider housing as a safe haven where they can protect their savings, which is why interest in housing loans have gone up so sharply.”

According to ČSOB, the strong interest in mortgages will continue this year but, mortgage rates will go up and the overall market will likely go down by about 10%.

“We don’t think prices will keep going up this year. In our opinion, prices will stabilize. Obviously, this can’t apply to all real estate, but the trend of rising prices should slow down this year,” Feix sad.