According to a market report by analysts at Deutsche Bank Research, an end to the house price cycle and rising real estate prices could initially be reached by 2024. Several factors lead the analysts to this forecast. First, Deutsche Bank's researchers expect the currently prevailing supply shortage to ease over the next few years. This movement is emerging as a result of the Corona pandemic and low immigration, among other factors.
Secondly, the undervaluations caused by the low interest rate environment may not materialize in the future if price momentum remains at a high level. Economists around the world are also currently anticipating rising inflation, which would mean that interest rate hikes are imminent and loans will become more expensive. According to forecasts, this would lead to a wave of sales in advance. According to studies and statements by analysts at Deutsche Bank Research, German real estate is also becoming less attractive compared with properties in other real estate markets.
In addition to an outlook for eleven German metropolitan regions in terms of price developments over the next three years, the study also includes an assessment of how the real estate market could behave after the end of the house price cycle in 2024. Based on historical comparative data, the analysts assume that house prices will initially fall by a total of around five percent in the following years; assuming there is no financial or economic crisis. At the end of these three years, forecasts indicate that annual increases of around 2.5 percent will resume. Thus, investors could expect a price increase of about 24 percent within a decade after the real estate price decline.
Source: Deutsche Bank Research
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