Turnaround in interest rates slows price development in residential real estate / demand
but remains intact
Berlin (ots) – Despite the strong development of residential real estate prices in the
In the first half of 2022, the interest rate turnaround by the European Central Bank (ECB)
together with the high prices a cooling of the market in the second
effect half of the year. This is the result of the Federal Association of Germans
Volksbanken und Raiffeisenbanken (BVR) in a current study on the German
residential real estate market.
“The combination of high inflation, rising interest rates and uncertain
economic prospects due to the Ukraine war affects the
real estate markets”, said BVR board member Dr. Andreas Martin. In the second
Half of the year and also in the coming year is therefore with a clear dampening
of the price development, especially in the expensive metropolitan areas.
“Basically, the demand for real estate remains due to immigration and the desire
but intact after more living space,” Martin continues.
In the first half of 2022, the price increase for owner-occupied residential property was
around 12 percent compared to the same period last year, also driven by buyers who are
still secure the low interest rates or secure themselves with property ownership
wanted to. For the year as a whole, the BVR is therefore anticipating an increase of up to 8.3
Percent.
The real loss of purchasing power and income of private households due to the
drastic price increases in the energy sector also affects the
Willingness to pay in the real estate market. At the same time, the turnaround in interest rates means
ECB reassess all during a troubled economy
Asset classes, which will also affect real estate with a certain delay
will. Should the turnaround in interest rates take place more quickly, for example due to new shocks,
the price development on the real estate market can already be positive this year
fall by five percent. The long-term fixed interest rate and personal use
however, stabilize the market. Mass forced sales as in the
This puts a stop to the US subprime crisis.
The BVR forecast is based on a model in which the price changes of
owner-occupied residential property in Germany’s 401 districts
macroeconomic factors such as inflation and interest rates as well as local
Factors such as the development of income, population and new construction in the district
be explained. The interest rate trend in particular has become more important here
proven fundamental. The prognosis assumes an increase in the
lending rates to an average effective interest rate of 3.5 percent;
based on a further increase in the key interest rate of the ECB by 0.5 percent in this
Year. Other interest rates, but also other inflation developments or one
Escalation of the gas crisis or the war in Ukraine could also affect the price development
significantly more difficult to affect.
The BVR’s new residential real estate forecast is available online at http://www.bvr.de
Publications, Economics available.
Press contact:
Federal Association of German Volksbanken and Raiffeisenbanken (BVR)
Melanie Schmergal, Head of Communications and
Public Relations / Spokesperson
Telephone: (030) 20 21-13 00, mailto:[email protected], http://www.bvr.de
Further material: http://presseportal.de/pm/40550/5303073
OTS: BVR Federal Association of German Volksbanks and Raiffeisenbank
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