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Residential buildings in Hanover: “Demand could collapse overnight”
Photo: Rust / IMAGO
After more than a decade, the trend towards rising house prices in Germany's metropolises and large cities could be reversed abruptly.
The Federal Institute for Building, Urban and Spatial Research speaks of “significantly stagnating elements”.
"The boom with ever-increasing prices for rented and owner-occupied apartments in the cities is over," says Matthias Waltersbacher, head of the department.
People are simply no longer willing and, above all, unable to pay even more money for housing.
With Corona, the Ukraine war and rising energy costs, "quite a lot has come together" in the past two years: "Purses are getting tighter, the ancillary costs are rising significantly again." As a result, there is less demand with high cold rents, prices would fall.
An expert from Deutsche Bank Research also expects the housing boom to end soon, possibly as early as 2024. The reason also lies in the fact that in the future, when interest rates are higher – fueled by inflation – professional investors will again increasingly rely on bonds instead of real estate .
"The moment bonds start yielding attractive returns again, demand for residential real estate could collapse practically overnight," writes economist Jochen Möbert in a study for the financial institute.
He doesn't anticipate a "massive correction," but at least expects a restrained fall in prices.
sbo/hej
