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Nine out of ten Slovaks own the property in which they live
1 month ago,

Nine out of ten Slovaks own the property in which they live

Nine out of ten Slovaks own the property in which they live. Within Europe, only Romania has a higher ratio. In Germany and Austria, it is approximately 50:50.

According to Maroš Ďurik, the CEO of Across Private Investments, Slovaks believe that to have one’s own roof over one’s head is one of the biggest certainties in life. The labour market supports this mentality as Slovaks are not pressed to travel in order to find employment.

Owning real estate does not represent a useless burden. The emotions tied up with owning property also have to be taken into consideration.

But let’s look at facts without emotion. In Karlova Ves in the capital, there is a new 4-bedroom flat, with parking space, for sale at 250,000 euros. In the next building, the same developer is offering to rent a similar flat for 800 euros a month. Which would be more advantageous – to buy or to rent?” asks Ďurik, as quoted by the TASR newswire.

Let’s imagine that if we buy the flat, we will use our own money for 30 percent of the price and take out a mortgage at 1.5 percent p.a. over twenty-five years for the rest. The monthly repayments will be 700 euros plus the costs connected with the mortgage such as insurance against failure to repay and the costs connected with ownership such as repairs, insurance, taxes etc. which would add up to about 100 euros a month. Thus the cost to lease and of ownership are basically the same,” he summed up for TASR.

Moreover, in the last ten years the price of real estate has grown 1 per cent faster than inflation. So after 25 years the investment will have a value of 320,000 euros,” added Ďurik.

In the industrially advanced countries, rental gives people the independence and flexibility to move. Children grow up and leave home and paying a mortgage for empty rooms is not very effective.

People from post-communist countries tend to buy liabilities. They feel rich when they have a great car, a seaside apartment, a cottage in the mountains but these investments do not bring anything in the end; conversely, they cost money.

The result of this is that Slovaks are among the most indebted and poorest citizens of the EU. While the property of an adult in Germany is worth on average 178,000 dollars (170,514 euros), in the Czech Republic this figure falls to almost 42,000 dollars and in Slovakia it is only 24,000 dollars, according to the Credit Suisses Global Wealth Databook 2015.

However, according to Ďurik, there is one big advantage to the present development “boom” in Slovakia. The market for rental property is growing so rent will fall. Leasing property will become more advantageous than ownership.

Photo: Tomáš Benedikovič

 

 

 

 

 

 

 

 


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