Central Real Estate Committee raises the alarm: Sentiment index declining

The fact that the current condition of the real estate industry is not optimal seems to have already reached consumers in the past few months. The mood index of the Central Real Estate Committee (ZIA) now confirms the feared low in the industry.

The real estate climate has fallen further since the beginning of the year

The air on the real estate market is getting thin. The development in the second quarter of 2023 in particular shows that the future prospects are poor. The ZIA-IW Real Estate Index (ISI) reflects the results of an economic survey conducted by the German Economic Institute (IW) in cooperation with the leading association of the real estate industry.

The Real Estate Climate declined compared to the beginning of the year and fell by 5.6 points to -4.3 points. The ZIA cites the unfavorable market environment as the main reason for this, i.e. the high interest rates in relation to the expenses for the real estate, which represent an increasingly heavy burden for the companies.

Tense situation: Current results must be a wake-up call

ZIA President Dr. Andreas Mattner explains that the results of the sentiment index should be seen by the responsible politicians as a wake-up call, otherwise the downward spiral will continue unabated.

Furthermore, Mattner describes how the paralysis in housing construction is indicative of the overall situation in the real estate industry. “The situation calls for a relaxation of state shackles,” said the President of the ZIA. The state is responsible for 37 percent of the costs that make the housing situation significantly more expensive – directly in the context of taxes and duties, as well as indirectly through additional regulations. This is how the ZIA describes it in a press release on the corresponding mood index on its website.

The committee calls on the responsible politicians to take action. It is not enough to comment on the industry’s obvious imbalance. The report also refers in particular to the additional increase in prices caused by the state.

Additional demand: KfW should set up a large-volume loan promotion program

The ZIA therefore calls for a large loan program from the Kreditanstalt für Wiederaufbau (KfW). This should support new construction projects at an interest rate of two percent without capping limits or size restrictions.

The mood index also makes it clear that the project developers in the industry are approaching a real recession. Only just under 60 percent of the projects were also implemented as planned. The rest is delayed or can only be realized in a simplified way.

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