The stock market day
Trend reversal on the real estate market: rents up, purchase prices down
1/2/2023 7:53 am
After more than twelve years of a real estate boom in Germany, experts expect prices to continue to fall, but not slump. In return, rents are likely to rise more sharply again.
According to Michael Voigtländer, a real estate expert at the German Economic Institute (IW), price declines can be observed above all for properties in poor locations or with high energy consumption. “If the energy balance is high or decent, I don’t see so much potential for correction.”
Higher lending rates, high construction prices and record inflation are making home ownership less affordable. According to a study by Landesbank Helaba, demand will partly shift to the rental market “and increase the upward pressure on rents there”. After a phase with relatively low surcharges, new contract rents have recently increased more strongly with growth of five percent, observes DZ Bank. Increasing immigration, including refugees from Ukraine, increases the need for housing.
Voigtländer thinks it is conceivable that a trend that has been going on for years is turning. “Perhaps we are now entering a phase in which rents are growing faster than prices.”