The price of flats in the Czech Republic is overinflated by 15 to 20
percent, according to the Czech National Bank. However, the bank board has
not changed its recommendations for mortgage lending. The forecast is that
the growth in real estate prices will slow in the coming months.
According to Deloitte, the price of an apartment in the Czech Republic rose to CZK 60,700 per square meter this year. An apartment with an area of 70 meters is selling for 4.2 million on average. In the large cities, especially Prague and Brno, prices are significantly higher.
Czech households' debt to banks and credit unions rose by CZK 9.24
billion to almost CZK 1.713 trillion in August when compared with July
data, this according to statistics released by the Czech National Bank on
Monday. In year-on-year terms the rise was higher than CZK 101.9 billion.
The debt of non-financial corporations rose by CZK 16 billion compared to
July and currently amounted to 1.145 trillion crowns. In year-on-year
terms, this was a CZK 42 billion increase.
Household debt has been rising continuously since February 2016, with mortgages making up roughly three-quarters of the entire debt, according to the Czech National Bank.
Prices in the Czech Republic have almost tripled since the foundation of
the state in 1993, according to a new analysis produced by Raiffeisenbank.
The Czech crown has strengthened by roughly a quarter in the same period,
the study found.
Raiffeisenbank analyst Helena Horská told the Czech News Agency that if somebody had placed CZK 100 under their pillow in 1993 it would today get them around a third of the goods it would have then.
However, if they wished to spend the same sum abroad they could buy a similar amount as today, because prices abroad have grown at roughly the same tempo as the crown has strengthened, she said.
The Czech National Bank re-issued 30,000 sets of six 20-crown coins on
Wednesday to mark the centenary of monetary separation from the former
The six coins featuring famous First Republic politicians such as Tomáš Garrigue Masaryk and Edvard Beneš, as well as the first central bank governors, were first issued in 2018.
At that time, collectors could exchange them for coins of the same value. Now the cost for six coins has been set at CZK 590. Another 20,000 sets of the coins are due to go on sale this autumn.
The Czech Republic’s producer price inflation slowed in May after rising
the previous month, according to data released by the Czech Statistical
Office on Monday.
The producer price index rose 3.8 percent year on year in May, slower than 4.3 percent increase in April. The biggest increase was in ‘electricity, gas, steam and air conditioning’ prices, which rose by 8.6 percent annually in May.
Prices of ‘mining and quarrying’, and ‘food products, beverages and tobacco’ rose by 7.5 percent and 4.0 percent, respectively. Among the main industrial groupings, energy prices grew the most, rising 8.1 percent in annual terms.
The countercyclical capital buffer rate for exposures located in the Czech
Republic will increase to 2 percent as of July 1, 2020, the Czech National
Bank (ČNB) announced.
The rise was motivated by an increase in risks linked with the growth phase of the financial cycle of the Czech economy and partial strengthening of signals of vulnerability of the domestic banking sector, the central bank said.
The ČNB sets the rate on a quarterly basis, always with effect from the following year. In the event of a sudden turn in the financial cycle, the bank is ready to lower the rate or even enable a full dissolution of the buffer, central bank governor Jiří Rusnok said.
The Czech National Bank has lowered its forecast for the development of
public finances in 2019 and 2020, in its Inflation Reports summary
published on Friday. The bank now expects a surplus of 0.3 percent of GDP
in 2019, as opposed to February’s more optimistic estimate of 1.2
percent. The new expectations for 2020 have gone down even more sharply
from February’s 1.3 percent to the current forecast of 0.2 percent. This
year, public debt is expected to sink from 32.7 percent of GDP to 30.9
percent. Next year, a further decrease to 29.3 percent forecast.
In a prognosis released on Thursday, the bank also lowered the country’s economic growth projection to 2.5 percent in 2019 and 2.8 percent in 2020. A further decrease in the Czech crown’s exchange rate is also expected.