Or: how are purchase prices trending on the housing market?
Owner-occupiers, capital investors, mortgage lenders, insurance companies, credit brokers – they all have one thing in common. In these challenging times, they are all equally concerned with future price trends on Germany’s residential property market. Will prices plummet? Or will they continue to rise? To date, there are no signs of a significant deterioration in housing market prices. But answers to these questions will come from the market itself – or more precisely, from the people and institutions who comprise the market, as a result of their expectations and decisions.
Below, we have put together five points in response to each question, all of which should be taken into account when assessing current market conditions.
Taking all these factors together, higher levels of empty housing (as last seen in the 1990s) is not something we need to expect – for the time being at least. Interest rates will (must) remain at the current low levels. Apart from equity investments, investors have limited alternatives to real estate, and in the current macroeconomic conditions, mortgage rates are also persistently low. Indeed, the first lenders have already started to advertise real-estate loans at 0% interest. People will continue to move into cities – especially attractive ones. However, their expectations will change: In terms of size, layout and facilities, residential accommodation will have to be suitable for working from home (WFH). At present, investors are being very selective in their investment decisions, concentrating increasingly on the residential property segment (following the principle “everyone needs a home”). However, they are also focusing more than ever on good locations in stable conurbations. In short, the housing supply is likely to remain limited, while housing demand will at the very least remain stable or start to rise again – good news for the housing market.