Vacation home prices are currently falling in some places. Nevertheless, the situation on the market for holiday properties will remain tense in the long term.
Beware of “too good” offers
According to Focus, there have been increasing reports recently that vacation home prices are falling in many places. This raises the question for many buyers as to whether now is the right time to take money into their hands and invest. According to Focus, particular caution is required with supposed bargains. If you take a closer look at them, it often turns out that the location or the infrastructure, for example, are unattractive. In other cases, the building fabric is already past its prime. This would mean that refurbishment work would be due in the near future, which would mean additional costs would not be long in coming.
Holiday properties on the Baltic Sea and North Sea
As part of a market analysis, McMakler Research examined the purchase price development in popular holiday regions on the North Sea and Baltic Sea for the second quarter of 2022. This shows that real estate prices on the North and Baltic Seas are showing a slight decline. On the Baltic Sea coast, a downward trend in price development can be seen in seven of the twelve regions examined. On the North Sea, however, only five out of 15 regions show a negative price development. “The current mix of rising inflation rates, higher interest rates and construction costs is having an increasing impact on the German real estate market. On the North Sea and Baltic Sea coasts, falling purchase prices and an increased supply are currently slowing down price dynamics. If you want to invest, you should take advantage of the current market situation and the resulting opportunities. Due to falling or stagnating purchase prices and rising rents, good returns can be achieved in the regions analyzed,” explains Felix Jahn, founder and CEO of McMakler.
Nevertheless, the situation on the market for real estate prices remains tense overall, as Focus explains. Because several factors contribute to the fact that the supply of new holiday properties can only grow slowly. At the same time, however, the excess demand could increase in the coming years. Because despite high prices and inflation, people will still want to go on vacation.
co-ownership
Due to the large excess demand, the business with holiday properties will probably develop more and more into an exclusive business in the long term. This, in turn, is fueling a new trend: vacation rental co-ownership. In this case, the use of a property is shared with several parties and only bears the pro rata costs, according to the news magazine. This makes it possible to invest with small amounts, which also makes the market more attractive for parties who would otherwise not have access to it.
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