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Residential buildings in Berlin-Mitte: »Of course we have a real estate bubble«
Photo: Christoph Soeder / dpa
Real estate in many cities and towns is now considered overvalued - and the risk of bubbles in the market is growing.
This is the result of the current Empirica bubble index.
“As soon as interest rates rise, prices have to go down or rents up,” warn the researchers.
However, rent increases are heavily regulated and should be even stronger in the future.
If interest rates rise, real estate prices could fall, as they did in the 1980s, according to Empirica.
"Of course we have a real estate bubble," writes Empirica.
According to the researchers, more important than the question of the existence of a bubble is the question of whether and when it will burst.
Due to the ongoing immigration and the scarcity of building space - possibly driven by inflation - it is more likely that the air will only escape slowly.
Because the high demand and the high construction costs stabilized the value of the property.
Working from home could change demand
The so-called setback potential indicates how big the price gap is.
According to the current index, this has risen to 46 percent in the country's seven largest cities, after having been 31 percent in 2018.
Nationwide, the potential for a setback is 28 percent (2018: 15 percent).
The Berlin research institute is also investigating in detail for all rural districts and independent cities nationwide how great the risk of bubbles is on site.
To do this, it uses sub-indices that put the purchase prices in relation to each other:
at the respective annual rent that can be collected,
annual income (or debt),
for construction work on site.
With regard to the ratio of purchase prices to rents, for example, the researchers found that these no longer grow in unison in 300 of 401 rural districts or urban districts.
Regarding the development of incomes, they write: "Either prices will fall at some point or incomes will rise drastically." In view of the "export dependency and unsolved structural problems", however, strong increases in incomes in Germany are rather unlikely.
In addition, the supply of apartments is increasing - and demand is also better distributed across the surrounding area.
And: "A sustained trend towards the home office and the newly discovered love for the home in some places could facilitate this process."
Taking these individual indices into account, the researchers see a moderate to high risk of bubbles in a total of 324 districts nationwide compared to the comparative year 2005.
Three years ago it was »only« 237. Here you can see how Empirica indicates the risk of bubbles in your district or currently your city:
Metropolises are particularly affected by the formation of bubbles.
Empirica attests that eleven of twelve large cities have a "rather high" risk.
This is only "moderately" high in Cologne.
In contrast, some places in the bacon belt have a significantly higher risk of blisters - such as the Segeberg district north of Hamburg or Mühldorf am Inn east of Munich.
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