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Investment Barometer: Real Estate Investments as a Popular Form of Wealth Creation

Real Estate is an increasingly popular form of investment among German private investors. 53 % consider home-ownership to be the best way to create wealth, 28 % believe that a leased residential property is the most suitable form – Despite the rise in prices, popularity of real estate investments has increased within one year by a total of 4 %. This is the result of the latest Investment Barometer carried out by Deutsche Sparkassen- und Giroverband and for which 1,900 Sparkassen customers have been interrogated during this year.

Great Confidence in Real Estate for Retirement Investment

More and more consumers rely on real estate investments in order to generate wealth and to make provisions for their old age. Every second consumer surveyed stated that the most important criteria for investment decisions was the security level. Many people consider that Real Estate investments meet this important requirement. Last but not less important investment criterias are flexibility, availability and high returns.

35 % of the surveyed customers of the saving bank Sparkasse respond to lower interest rates by choosing real estate as their suitable investment option – increase of 3% compared with the previous year. As shown in the current survey, shares and securities merely have a lead of 1% over real estate investments. Despite investors having drawn the right conclusion by switching to real estate investments, the survey emphasises an alarming development in terms of retirement planning: the number of non-savers has increased again.

Private Homes with Low Level of Loan Capital Preferred

According to the survey, round one quarter of the population (24%) are planning the purchase of real estate for own use. Although three quarters of them are willing to take out a loan for this purpose, they want to invest as much equity capital as possible. Almost one half prefer raising a loan capital of not more than 60% of the purchasing price. However, 20 % of the respondents would accept a loan rate of 80 % of the purchase price.

Today you can already feel the effects of high demand for residential properties on the market. Accentro Wohneigentums Report of 2015 states that in 82 of Germany’s main cities, properties changed hands for 24.9 billion euros in 2014. – a new record since we have almost a four percent increase compared to last year.