Housing Market: Germany: Difference between revisions

Housing Market: Germany (view source)

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-==== Forecasts 2024 ====
+==== <big>Forecasts 2024</big> ====
 '''Schwäbisch Hall real estate expert Oliver Adler. (Source: Bausparkasse Schwäbisch Hall AG):'''
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 * In contrast, real estate prices in rural and structurally weak regions should fall significantly in the first half of 2024. Price drops of around 10 to 15% are possible.
 * Existing properties that require a lot of renovation or have a poor energy balance also become cheaper. In particular, properties in energy efficiency classes G and H will also lose value in the first half of 2024.
+'''PREA (February 27, 2024):'''
-==== Long Term Forecats ====
+''For the study, analysts examined real estate market cycles in 24 countries from 1975 to 2024 and applied the data to the current situation in the German residential property market.''
+Anticipate, prices will fall back to the level of early 2017 by the end of this year. Compared to the first quarter of 2022, this would correspond to an inflation-adjusted price correction of 25 percent. Afterwards, the market will either enter a recovery phase or the price correction will continue at a slower pace.<ref>https://cijeurope.com/en/prea-predicts-further-price-corrections-in-the-german-housing-markets/post.html</ref>
+* Although prices for residential properties in Germany '''have already fallen by 21 percent''' between the first quarter of 2022 and the third quarter of 2023, the bottom has not yet been reached. The saying 'Survive until 25' is likely to become a reality for many market participants.
+* PREA analysis confirms that there is a positive correlation between the duration and dynamics of upswings and downturns. This means: if property prices have risen sharply over a long period, this was usually followed by a long phase of significantly falling prices. Therefore, the current downturn in the German residential property market is still too short and too mild.
+* The opportunity costs for real estate investment have drastically increased with the turn in interest rates. While real estate as an investment was almost without competition for more than a decade, the residential property market is now competing again with other forms of investment such as stocks and government bonds
+* Even upper-middle-class households with a monthly income of 5,000 euros or more can only afford a larger existing apartment in the top-7 cities if they spend up to 50% of their monthly net household income on financing.
+* Furthermore, the supply in the German residential real estate market is likely to increase soon. The reason: With higher interest rates, the costs for refinancing have also risen. By 2025 at the latest, many owners will need to refinance the loans they took out ten years earlier under favorable conditions
+* For investors,due to the turn in interest rates, not only have their financing costs increased. At the same time, the value of the mortgaged properties and thus the value of the securities have decreased. This limits their borrowing capacity and reduces their liquidity. Thus, they may be forced to reduce their holdings
+* However, in many major cities, especially the top 7, the decline in prices may be less severe. A significant reason is the sharp increase in rents in recent years
+==== <big>Long Term Forecats</big> ====
 '''<small>PostBank</small>'''
 [[File:Screenshot 2024-03-26 124434.png|center|thumb|732x732px|https://www.postbank.de/themenwelten/bauen-wohnen/preisprognose-bis-2030-wo-steigen-immobilienpreise.html]]