Price slumps of up to ten percent for condominiums and owner-occupied homes in Germany - this is the development predicted by study author Konstantin A. Kholodilin from the Macroeconomics Department of the German Institute for Economic Research (DIW Berlin). Together with his colleague Malte Rieth, he examined the developments in rental and purchase prices in 97 German cities.
The study also shows that prospective buyers in particular are having to dig deeper into their pockets. Prices for single-family homes and terraced houses have roughly doubled in the past decade. Prices for condominiums have risen by around 150 percent in the past decade, and prices for building plots by around 130 percent. Rents also rose during the same period, by about 56 percent. However, DIW Berlin considers this large discrepancy in developments between purchase and rental prices to be a cause for concern.
This is because investors who want to refinance their property by renting it out, or private individuals who want to save on rent by buying a property, are now facing a problem. If rents and purchase prices diverge, this could also lead to so-called price bubbles. Nevertheless, the real estate market is likely to remain comparatively stable, according to DIW Berlin, because current developments also have to be taken into account. For example, real estate prices also rise when only a few properties are available but demand for them is high.
Source and further information: diw.de
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