Price slumps of up to ten percent for condominiums and owner-occupied homes in Germany - this is the trend 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 development of 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 detached and terraced houses have roughly doubled over the past decade. Prices for condominiums have risen by around 150 percent in the past decade, while prices for building plots have increased by around 130 percent. Rents have also risen in the same period, by around 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, according to DIW Berlin, the real estate market is likely to remain comparatively stable, as current developments must also be taken into account. For example, property prices can also rise if only a few properties are available but demand for them is high.
Source and further information: diw.de
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