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"Singles" are hungry to own their houses but they will suffer from mortgage restrictions.

July 2018 /

People who live without a partner are more and more contacting developers and real estate agents. The share of singles among people interested in buying real estate has increased in recent years. Experts expect their real estate appetite to be rising in the coming months, because mortgage tightening will hit them in the autumn.

Mortgage applicants will have to show a much higher income from October due to measures taken by the Czech National Bank (CNB), which will affect, among others, those who want to buy an apartment for themselves. Those interested in a mortgage to buy 1 + kk in Prague for 3.59 million Czech crowns will have to show a gross monthly income of 35,600 CZK and a minimum savings of 718 thousand CZK for property downpayment.

Singles (usually people aged 25-40) are the third largest group of people interested in mortgages and the anticipated mortgage restrictions increased their interest in mortgages in recent years.

"When we checked customer research at the end of last year, we came up with a surprising fact that the proportion of singles clients was almost 34 percent in 2017. In some specific projects with small layouts, the single clientele rate was even around 45 percent, said Central Group Executive Director Michaela Tomaskova.

In 2010, this group of customers accounted for only 22 percent. Even before the end of September, the developer expects increased interest of singles for mortgages and after then probably singles shift into rents.

Nevertheless, the number of single-person households in the Czech Republic can still be expected to grow. "This group will continue to grow because it contains an increasing number of people moving to Prague to work and want to live here, so they want to invest in their own homes," said Finep spokeswoman David Jirušek.

On the secondary market, these singles are less present. "If we are really thinking about singles - unmarried couples, then we are talking about 5 percent of the market, which is more or less constant over the past five years," Jakub Hrbáč of Re / Max Plus told iDNES.cz. Without a mortgage, most of the buyers are only investors

Buying a flat without a mortgage is very difficult at today's apartment prices. "In the vast majority of cases, the clients pay real estate with a mortgage loan," said Hrbáč. The same was confirmed by Maxima Reality, which records purchases through mortgages in up to 70 percent of cases.

Additionally, real estate clients typically require a higher LTV (loan-to-value ratio). At the same time, bank pricing estimates are often below the actual transaction price, so further tightening of mortgages may affect the secondary market very strongly. Experts from Maxima Reality estimate that it can affect up to a third of buyers.

Only investors can pay for a flat in cash. "In the case of new build flats today, about 50 percent of investors are using mortgage as a lever for a higher return on their own money and the other half of flats are being purchased by clients for a shelter, most of them taking a mortgage under 80 percent LTV. , "Jirusek confirmed, adding that people up to 30 years of age belong to this group. Singles a mingles

Singles clients are a very specific target group. Not only do they choose smaller dispositions but also have more specific requirements for new homes. Location is also a very important for them. They prefer a good transport to the city center, as well as reachable green areas and opportunities for active rest and sports activities.

"The group up to the age of 30 is the market leader primarily looking for small flats up to 2 + kk, which also corresponds with the most represented category of apartments within the total flat sales in Prague," says Jirušek. Small flats are preferred by singles also on the secondary market.

Another interesting group is the so-called mingles. These are couples who live together, but each of the partners has their own flat. Mingles tend to be successful in employment, financially independent and satisfied in their relationship, however they refuse to give up a certain form of freedom in the form of their own flat. That's why they keep their own apartment, which they typically bought at the time they were singles.