--- category: "english" media: "text" outlet: "Seznam Zprávy" url: "https://www.seznamzpravy.cz/clanek/ekonomika-ocima-byznysu-ocima-byznysu-nemovitosti-jsou-pro-vetsinu-cechu-spatna-investice-307481" date: "2026-06-01" headline: "Real estate is a bad investment for most Czechs" byline: "Tomas Havranek" word_count: "1019" perex: "Czechs regard apartments, houses and land as the safest investment. Yet real estate today is a risky bet on Czech politics, demographics and the koruna, writes economist and Charles University professor Tomas Havranek in his column." translated: "2026-10-05" translation: "sz-nemovitosti" body_note: "An English translation of the Czech original, made with AI. The Czech text remains the record of what was written: [Očima byznysu: Nemovitosti jsou pro většinu Čechů špatná investice](/komentare/sz-nemovitosti/)." --- # Real estate is a bad investment for most Czechs When ordinary Czechs have money, the only thing they invest in is real estate. According to the Czech National Bank (CNB), real assets (which mostly means domestic property) account for 95% of the total net wealth of Czech households. Sure, it beats keeping a pile of cash in a bank account, where inflation eats it up. But economically, betting everything on one horse is dangerous. There are three reasons. First, Czech politics. The housing crisis is not a law of nature; it is our choice. We are not Singapore, with nowhere left to build. Rapeseed alone takes up two and a half times as much land as all the built-up areas and courtyards in the country. Once the government and the cities permit houses and trees, say in a 1:1 ratio, in place of the biological deserts of subsidized biofuel crops, property prices in some places will fall by double-digit percentages, and we will be better off in terms of climate, biodiversity and water retention in the landscape too. Second, Czech demographics. We will not become Japan, where commercial property prices fell 70% after 1991 and residential prices 50%. Still, it is worth asking: who will be living in Czech houses and apartments 40 years from now? Perhaps millions of Slovaks and Ukrainians will come, but if they do not, who will pay the rents that ultimately determine apartment prices? Personally, I fear the answer is nobody, and that a nasty hangover awaits the Czech property market once it realizes this. Third, the Czech koruna. It makes sense to hold some assets in koruna, because most of our spending is in koruna. But we no longer need to fear investing abroad; the koruna's trend appreciation ended in 2008. On the contrary: once your neighbors learn to invest abroad, they will be buying euros and dollars, and that will put downward pressure on the koruna. Something similar has been happening in Japan in recent years, where the currency has been weakening partly because Japanese households are learning to invest in the US. ## Stocks are a better buy than another apartment What is the lesson for someone who does not plan on dying in the next 10 years? Go easy on more real estate. Most of you already own some, or will inherit it from your parents, often a weekend cottage as well. If you are not inheriting and you rent, enjoy the freedom that comes with it. If you have spare money, buy global stocks, gradually. That is the recommendation of modern economic research: it does not guarantee you wealth (we cannot see the future), but there is little you can do with your money that makes more sense. What about the risk, the swings in stock prices? Yes, the high long-run annual return of around 6% on average after inflation is precisely the reward for the risk you take on. Nobody gives money away for free. By financing companies through buying their shares, you take a share of their profits, which flow mainly from technological progress. For a year or two it is not worth it because of the volatility, but if you can afford to leave the money parked for 5 to 10 years, it is a more rational choice than government bonds. Think you can't manage it? Today it takes a few minutes, and my parents, who are over 65, manage it just fine. Czech investment companies will gladly help you buy diversified stocks from around the world, but make peace with paying them a fee of around 1% a year for it, so you net 5% rather than 6%. For most Czechs that is a good deal: a small amount every month by standing order, nothing to worry about, and your money invested the way wealthy households in developed countries invest theirs. Another option is to open an account with a broker and buy shares in stock funds (ETFs) yourself. That also means exchanging koruna for euros yourself. It cannot always be fully automated and it does not pay off for everyone, but you can get the total fee down to just 0.2% for a diversified portfolio of global stocks (FTSE All-World, VWCE). Buy gradually and slowly, not everything at once. ## Buy your kids an ETF, not a plot of land I do the same myself: I invest my spare money both through Czech investment companies and directly through a broker. Besides convenience, the Czech companies offer cheap, tax-advantaged products for retirement and for children. Setting up a stock position for your children is exceptionally sensible, and if you do nothing else, you should at least think about that. Once more, put differently: do not save for your children in a bank account, and do not buy them an apartment or a plot of land. Buy them a global stock ETF every month, even if it is only CZK 500 worth. Stocks can fall, as we saw during the financial crisis or Covid. Globally, though, they rise again, and that will hold as long as the innovative market system and technological progress keep working. Of course, both may come to an end. A nuclear war could come along and leave my portfolio worth roughly zero. But then I would have other worries than my account balance. Progress may end, but without productivity growth there will be no money for further increases in apartment prices either. The bottom line: most of us already have heavy exposure to Czech real estate, either because we own it or because we will inherit it. Increasing that exposure further is unwise. Global stocks offer the best diversification with a long-term return. Compared with real estate, they also have the great advantage that you can sell them quickly when you happen to need cash. That means a small reserve in a savings account, a few months' salary, is enough; the rest can be earning. If dry economic arguments do not convince you that stocks beat another apartment, consider this: my portfolio does not call me at two in the morning to say water is leaking in from the neighbor upstairs.