Spring, as usual, generally brings optimism and new hope in our lives. This year, however, in addition to surprising temperatures, we experienced a tide of pessimism, which raised interest rates around the world to unprecedented levels. In this economic environment, it’s only a matter of time before cracks begin to appear, such as the bankruptcy of three mid-sized American banks in March or the demise of the European giant Credit Suisse.
Rising rates make financing more expensive, lower the value of assets, and crush anyone exposed to a significant debt burden from the previous era of cheap money. Nevertheless, we at Svoboda & Williams have managed to remain cautiously optimistic. Data from the first quarter of the year shows that quality real estate continues to be a relatively safe investment even during a crisis. Although in the last several months the sample of properties monitored by Svoboda & Williams saw a decline of 2.4 percent, compared to last year’s drop of 15 to 20 percent in equity indices these are favorable numbers.
At a time when investors and most households are struggling with the negative effects of the recession, it’s healthy to take a broader view of reality. The numbers indicate that it’s building blocks that will provide the most stability in the economic lives of the majority of Czech households. It provides them with a ticket to join the global financial elite.
Does all of this sound unlikely? According to the Global Wealth Report 2021, 90 percent of the world’s population has an individual net worth of less than $138,346, i.e. roughly 3 million crowns. This means that if you own a studio apartment in Prague, you are one of the 10 percent richest people on the planet. In the Czech Republic, according to recent studies, about 54 percent of the population are homeowners and two thirds of Czech households have their assets in real estate.
As these figures show, we seem to be in pretty good shape, don’t you think?
I wish you all a pleasant, optimistic spring season!