Expert Opinion: Housing Market Entirely Unimpressed
Many observers agree that the German housing market has remained remarkably unaffected by the coronavirus crisis so far. This assessment has now been confirmed by the so-called Immobilienweisen expert panel of the ZIA German Property Federation1 – which is not exactly known for glossing over the situation. On the contrary, the panel issued repeated warnings with respect to the housing market in recent years.
In 2017, for instance, Harald Simons, a chartered surveyor of the ZIA German Property Federation, predicted that “the party” is over on the housing market. Simons repeated his prediction of falling price in some metropolises in the ZIA Spring Report of 2018,2 yet no such dip occurred. Instead, prices continued to go up. With this in mind, it is all the more remarkable that the recently published ZIA Fall Report 2020 emphasizes that the German housing market is “entirely unimpressed by the coronavirus pandemic and its consequences.”
Buyers Favour Real Estate as Safe Investment
The panel experts have now diagnosed an unchecked demand for condominiums in Germany’s cities. Their findings show that both owner-occupiers and buy-to-let investors are active on the buyer side. The ZIA surveyors noted that real estate is often acquired in order to “invest wealth safely in times of crisis.”
Moreover, the latest survey provides a bright outlook for the market development going forward. Even if the macro-economic development were to impact the housing market in the medium and long term, drastic setbacks are not to be expected. The survey advises housing market players not to panic: “A simple ‘keep going’ is more helpful,” the surveyors wrote.
Selling Prices Keep Going up
This positive assessment was reached by the experts because the price trend has been every bit as dynamic as in previous years, despite the crisis. According to the survey, condominiums in Germany were twelve percent more expensive during the second quarter of 2020 than they had been a year ago. This means that the price growth was nearly as fast as it had been during the second quarter of 2019, when condominium prices showed a one-year increase by 13 percent.
One reason for the persistently positive price trend, according to the ZIA survey, is that interest rates are likely to linger on their low current level, not least because of the coronavirus crisis. Market players apparently do not expect interest rates to rise drastically over the next ten years. Low interest rates have a positive impact on real estate prices – because condominium buyers benefit from favourable loan terms while investors step up their hunt for real estate in order to generate returns.