According to DZ Bank, the sharp rise in prices for apartments and houses in Germany is likely to continue in the coming year. However, a slowdown in growth rates can be expected, according to a study published on Friday. With interest rates still comparatively low, DZ Bank expects the prices for houses and condominiums to rise by 7.5 to 9.5 percent in 2022. The slower population growth and stronger new construction are likely to ease the relationship between supply and demand and thus dampen the rise in prices and rents. By way of comparison: DZ Bank expects residential property to become 11 percent more expensive this year.
A rise in interest rates, which would make loans more expensive, would slow down the dynamics of the real estate market more, the bank believes. But even then, the probability of a correction is moderate - despite high prices and growing private debt. Unemployment in Germany is low, and fixed-rate loans that protect loans from rising interest rates are widespread. In addition, the recent rise in inflation is driving demand for real assets, as they devalue savings on bank accounts.
This year, the real estate boom that was ongoing in 2010 accelerated: For the second quarter, the Federal Statistical Office recorded an increase in real estate prices of 10.9 percent compared to the same period in the previous year - the largest increase since 2000. In the pandemic with lockdowns and more home offices, the Demand for residential property has increased, as has more home space.
The study by DZ Bank agrees with the assessments of the Association of German Pfandbrief Banks (vdp), which also expects the recent rise in residential property prices to weaken.
But even with rising interest rates, he does not expect a slump.