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Real Estate

A house as an investment? Yes and no

What is the truth about the claim that real estate is the best investment?

We will go through several types of real estate, including their dependence on price and location.

My house, my castle, they say. Despite the somewhat older origin of this proverb, it is still relevant. It is always advantageous to own your own house, apartment or that castle. It’s worse if you have free money and want to save it in the property. Here it is better to measure twice and cut once than vice versa. Investing in real estate often corresponds to the clichéd idea that grunt is the foundation. Those who do not own any property are often seen as poor by homeowners. Is it better to be “landless” nowadays or to go into debt for life with an uncertain prospect that you will pay off the debt and the property will retain its value?

Definitely don’t think that a house or apartment will increase in value over decades. Rather, it will resist inflation, but the tooth of time will eventually bite its bite. Modernization of real estate can become more expensive in such a way that even possible internal appreciation cannot cover it.

What to look out for when buying a property

Buying a property will probably be the biggest purchase in your life. However, in order not to make it a fateful nightmare, it is advisable to think in advance and answer a few questions. What do you expect from housing? Will you always have a good job, or do you have a sufficient financial reserve for sudden loss of income? You should ask yourself and these questions sooner or later, even before you buy a mortgage on a property from which it is not so easy to move.

If a person wants to become independent and fly out of his family nest as soon as possible, he should not headlessly buy the first property that will stand in his way. A similar analogy can be used to choose a life partner with whom, in addition to living together and having children, you will also use the property.

If you are planning a family, you should not buy a small apartment. The idea of ​​exchanging it for a bigger one later and paying the rest of the price is wrong in most cases. When you get to the stage where, for family reasons, your former place of love is a bit tight, you may encounter a situation that the bank will not lend to you. This is because your dear half is on parental leave, which the bank will reflect in your mortgage application. Therefore, even a mortgage loan that you would get in peace if you lived in a two-member household with two incomes may become inaccessible to you.

You will be in a similar situation if you want to look “in” in front of your friends and acquaintances and buy your own apartment. You may remember the moments of well-being with the living of the rental apartment only when you, together with your colleagues, complain about what kind of non-Christian mortgage you are paying or that you have troubled neighbors. But then it would be hard to chase them.

Even the acquisition of a family house may not be twice as advantageous. If you add to this, the house is located in the satellite district behind the city, where the city does not go. The problem of many Czech satellite towns lies in poor or no transport services at all. In short, you will not get public transport there. This is a problem when you have a temporarily immovable car, for example. There can be no question of social evening activities in the city center and then the return of public transport.

However, something else is owning a small house somewhere on the edge of a former district or smaller regional town. Possibly in a larger city, but with functioning public transport in the vicinity.

The value of real estate is also determined by the purchasing power in a given locality. Therefore, for example, the prices of prefabricated flats in cities with a high unemployment rate are literally incomparable with cities where the unemployment rate is well below average. This applies in particular to Prague, where unemployment reaches a few percentage points, while in the Ústí nad Labem or Moravian-Silesian regions, for example, it is much higher.

Statement: The value of the property will increase over time

There is a relatively widespread claim that the value of real estate will rise over time. Unfortunately, this does not apply to all realities. Definitely do not succumb to the idea of ​​growing value of a panel apartment somewhere on the outskirts of the city. If you want to see for yourself a future investment in an apartment or house, do a simple test. Ask yourself: Where would I like to buy the property? Will the answer be that you prefer an inhabited housing estate or a residential or city district with First Republic apartment buildings? If you choose the second option, do not invest your money in an apartment in a block of flats today. There will be more people who think this way in twenty, thirty years than they do now. In addition, real estate market conditions will change due to the deregulation of rents, new construction and the natural decline of the population. And literally unrecognizable.