Wilmington, DE – The median forecast for German housing prices is to rise by 7% this year according to Lioneza Consulting LLC analysts. At the same time, the price growth rate is expected to slow down to 3% in Q3-Q4 2023, and to 2% in Q1 2024. In the March survey, house price growth expectations for the respective years were 6.3%, 4.5%, and 2.8%.
The reason for the acceleration in the expected rise in prices is believed to be insufficient supply, which outweighs the deepening crisis in the cost of living and the prospect of an increase in ECB interest rates. But the crisis-related decline in disposable household incomes is expected to slow the rise in property prices over the next two years.
House prices will continue to rise, albeit at a slower pace, as higher interest rates, higher prices than in previous years, and lower household incomes undermine the affordability of residential real estate.
As in most parts of the world, German prices were rising rapidly in April, with inflation at its highest level in four decades. This is due to rising fuel and energy prices against the backdrop of the Ukrainian conflict. At Lioneza Consulting LLC expect housing affordability to deteriorate for both first-time home-buyers and the rental market. This is the worst-case scenario – continued rising house prices, rising interest rates, a slowdown in construction, and a decrease in purchasing power due to inflation.
They also expect rents to rise due to reduced construction activity. Property owners are trying to cope with the inflation and additional demand from Ukrainian refugees. When asked to what level the ECB should raise its deposit rate, which is currently -0.50%, to cool the housing market, the average answer is 1%.
Now investments in the German real estate market are still of interest but are unlikely to be suitable for investors with a lack of experience and a small portfolio. Lioneza Consulting LLC experts are ready to offer an in-depth analysis and complete guidance to our new clients on the German real estate market. Contact the sales department for more info today!
Company Name: Lioneza Consulting LLC
Contact Person: Gregory Henderson
Email: Send Email
Address:1401 Pennsylvania Avenue, Suite 105
State: DE, 19806
Country: United States
Disclaimer: The views, suggestions, and opinions expressed here are the sole responsibility of the experts. No Biz Economics journalist was involved in the writing and production of this article.