Despite declining price dynamics, the German housing market remains attractive to capital investors. This is the result of the market research Marktkonferenz-Studie Wohnimmobilien, a study on residential properties carried out by HSH Nordbank. Although rents continue to rise, they will increasingly stagnate at a higher level, too. According to experts investors are to gain advantages from this, since a total annual return of 6 % over a period of 10 years is considered to be an extremely profitable return in terms of residential properties. However, active management and tenant care are said to be indispensable in order to achieve such results. Framework conditions for letting are stated to be good. Vacancy in A-locations has dropped under the fluctuation reserve rate of 2 %. Throughout Germany, the value may not increase again to an amount of 3.1 % until 2017.
Rise Of Housing Rents Until 2018
According to the HSH study, the Mietpreisbremse (Rental brake; Tenancy law reform which gives local authorities the power to impose rental controls) is expected to have only a low impact on the rental level and on construction activities. The study predicts a general rental increase of up to 4.4 % for all cities in A-locations until 2018. A plus of 6 % is the forecast for B- locations. Purchasing prices of condos will continue to rise, too. Whereas they have increased by 43 % between 2009 and today, prices are expected to climb up by a further 6 % until 2018. Due to low interest rates, housing purchases will still remain affordable. The data of HSH Nordbank prove that the investment risk is limited and could only increase to a moderate level.
Demand For Apartments Exceeds Offer
Furthermore, the study of HSH-Nordbank shows that the demand for housing will not only grow in urban areas but also in B- and C-locations. Responding to the lack of housing, more and more persons seeking for an accommodation move to suburban areas. The trend towards suburbanisation, nevertheless, ensures that a lot of Germans may still be able to realise their dream of a home ownership since spaces for that purpose are missing at prime locations. Contrary to other market experts, figures in the HSH Nordbank study have not been adjusted because of the current number of refugees. Experts state that it is still not clear how many refugees are going to stay and which kind of housing they would need.