Mortgage rates below 5% for the first time in three years: what does this mean for the Prague housing market?
The first quarter of 2025 brought a significant change in the mortgage market. According to Swiss Life Hypoindex, the average mortgage offer rate in the Czech Republic fell below 5% for the first time since mid-2022, currently at 4.96%. This development may significantly affect the decision of those interested in buying their own home, especially in Prague, where the market is reawakening after a long downturn.
Mortgage rate development in the Czech Republic (2023-2025)
As can be seen in the chart above, mortgage rates have been gradually declining since the beginning of 2023. The main reasons are the stabilisation of inflation and the reduction of the base interest rate by the Czech National Bank. This trend, coupled with clients' realisation that mortgage interest rates are unlikely to reach the two per cent mark for some time, as they have in the past, is leading to a recovery in the property market.
What does this mean for the Prague apartment market?
Lower interest rates quickly translate into growing demand for real estate - and in Prague this is doubly true. The average realised price of flats has climbed to CZK 127,000/m² at the beginning of 2025, up 10% year-on-year. For new-builds, prices are even higher: according to available data, the average offer price is 163,203 CZK/m².
At the same time, the supply of new flats remains limited in the long term and has not kept pace with growing demand. The consequence of this situation is the rising price of flats on the primary and secondary market.
What does this imply for the buyer?
- Lower rates improve mortgage affordability.
- However, property prices in (especially in Prague) continue to rise.
- Speed of decision can play a key role - longer hesitation can mean a higher price.
Are you considering buying a flat? We will be happy to advise you on financing and selecting a suitable property. Within our development projects, it is also possible to take advantage of advantageous housing association financing.
If you are looking for quality housing close to the greenery and at the same time not far from the centre, then Rezidence Pod Karlovem is for you. The historic house, which has undergone a successful reconstruction, offers a total of 17 apartments in 2+kk, 2+1 and 3+kk, including duplexes. Wooden windows, oak parquet floors, real marble tiles, recuperation or air conditioning are just a small list of standards you can look forward to. Make sure you don't hesitate to make an appointment for your viewing today by emailing prodej@portainvest.cz or calling +420 737 604 885.
SOURCES:
https://www.banky.cz/clanky/vyvoj-urokovych-sazeb-hypotek/
https://www.idnes.cz/finance/hypoteky-a-pujcky/hypoteka-nemovitosti-swiss-life-hypoindex-sazby.A250506_095332_pujcky_sov
https://www.klik.cz/blog/vyvoj-urokovych-sazeb-hypotek/
https://www.hyponamiru.cz/aktualni-i-historicky-vyvoj-urokovych-sazeb-hypotek/
