Real estate price pressure could ease in Germany

Real estate price pressure could ease in Germany

After an uninterrupted real estate boom even during the Corona crisis, economists are expecting a little less price pressure in the new year. "The housing markets in Germany are surprisingly robust," said Stefan Mitropoulos, economist and real estate expert at Landesbank Hessen-Thüringen (Helaba). The pandemic will probably dampen the price increase. Instead of rates of five to six percent per year, apartments and houses could become more expensive by four percent in 2021. Michael Voigtländer, real estate expert at the Institut der Deutschen Wirtschaft, assumes that prices will not rise as strongly in the new decade after the long boom. "Interest rates on real estate loans have already fallen sharply, and the enormous boom in the labor market cannot simply be repeated." With the Corona crisis, some experts had expected an end to the year-long real estate boom. During the shutdown in the spring, the housing market came to a standstill, there were no advertisements, and there were hardly any visits. But the prices for apartments and houses continued to rise - despite the historical slump in the German economy with millions of short-time workers and rising unemployment. In the third quarter, residential real estate rose 7.8 percent compared to the same period last year. According to the Federal Statistical Office, this was the strongest price increase since the end of 2016. Prices skyrocketed not only in metropolitan areas, but also in medium-sized cities and more densely populated rural areas. In the summer quarter the increase was also strong with a plus of 6.6 percent. No trace of the crisis. "The run on real estate is unbroken," said Thomas Krahl, who heads the real estate business at asset manager Deutsche Oppenheim. There is great interest in the asset class - as is the willingness to pay higher prices. "While 25 times the annual rent was considered expensive some time ago, today 28 to 30 annual rents are also accepted as purchase prices." Wealthy families bought entire apartment portfolios in cities.