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More and More Prospective Property Buyers Bank on Appreciation

With a view to the persistently low level of interest rates, buying real property is increasingly perceived as a lucrative, sound and affordable investment. More than one in two people contemplating homeownership are convinced that their property will appreciate significantly. This is one of the findings of the latest Real Estate Barometer (“Immobilienbarometer”) published by mortgage broker Interhyp and the ImmobilienScout24 real estate portal. More than 2,900 leads were polled for the underlying survey in February 2016. 

What makes homeownership such a lucrative proposition, in addition to the low level of interest rates, is the steady upward trend in condominium prices. The survey shows that 55 percent of all respondent leads believe that the property they intend to acquire will gain in value. At the same time, the fear of a possible deterioration of its value has dropped by 29 percent among prospective buyers. They have been encouraged by recent price hikes for residential real estate, as only one in fourteen leads (a mere seven percent) expect to lose money on their property investments.

Younger Leads More Optimistic 

According to the survey, 43 percent of the respondent leads firmly expect to see at least enough capital growth to offset inflation, while twelve percent count on significant appreciation. Especially the group of 18- to 29-year-olds now take a far more optimistic view of homeownership than they used to. As recently as 2015, one in six members of this group (17 percent) was convinced that owning real estate would inevitably imply impairments. One year on, the sceptics account for just five percent of this group anymore. Instead, a majority of younger leads (61 percent) assume a real estate investment will at least outperform the inflation rate for the time being.

Buy-to-let investors appear to be just about as confident. They approach property acquisitions with serious profit expectations. One in five leads in this group (20 percent) expect to see substantial appreciation. And 62 percent of the prospective buyers who plan to acquire property as private investment believe that their assets will grow in value at least enough to beat inflation. In 2011, this assumption was shared by little more than one in ten investors (11 percent). Owner-occupiers returned a similar picture, as concerns over softening property values were voiced by just eight percent, down from ten percent a year ago.