The German Investment Real Estate Association (DAVE) has observed increasing pressure on the investment market. On the one hand, sellers are asking themselves whether they have missed the right time to sell. On the other hand, portfolio holders are uncertain how the follow-up conditions will develop in the event of an extension of existing construction financing.
According to DAVE, rising interest rates, inflation and the uncertainties caused by the war in Ukraine, among other things, are leading to higher equity requirements on the part of banks and to them taking a closer look. Among other things, they are increasingly checking the mortgage lending value. This indicates the amount the bank would receive in the event of a foreclosure or sale of the property. If the mortgage lending value is too high, financing is no longer possible due to the increased risk.
As a result, it is now only worthwhile for banks to grant a loan for properties that can be used in the long term and are sustainable, among other things. Their prices are likely to be higher and buyers can presumably afford higher loan installments than buyers of existing properties. "Properties that no longer meet the current top requirements for amenities and location are thus the losers. Here the prices go down," explains Gerhard Alles, Schürrer & Fleischer Immobilien. According to Axel Quester of Armin Quester Immobilien, "a market division is emerging in the still high-priced segment and in falling values for properties that are no longer marketable."
Source and further information: dave-immobilienverbund.de
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