Dusseldorf Even experts are surprised: building interest rates have passed the four percent mark. In January they were still at one percent. The effects of this interest rate dynamic on the economically highly relevant real estate market can hardly be overestimated. For many potential buyers, the dream of owning a home is over for the time being at such an interest rate level. The main reason for this development is the turnaround in interest rates by the central banks, which after a long period of hesitation are now resolutely fighting inflation.
The problem for many buyers is that the real estate market is very sluggish and prices only react with a delay. There are initial data from the beginning of October that show that prices are falling somewhat across the board. However, they may then be at the 2020 level, while interest rates have returned to the 2011 level. At that time, a decade followed with falling interest rates on the one hand and sharply rising real estate prices on the other.
In addition, in this state of shock, all forecasts have become obsolete or at least directly outdated. Even professionals like Hypoport boss Ronald Slabke admit that the German real estate market has not experienced such a deceleration in the last 25 years and that there is a lack of historical experience about the speed of the necessary convergence process.
So if you haven’t found your absolute dream property, have a lot of equity and a very high income, you’d do well to wait and see. He probably has no other choice because no bank wants to give him a loan at the moment.
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But there is hope: it is quite possible that the situation will be clearer again in a year or two. By then, the central banks should be through with the biggest interest rate hikes, and maybe there will even be the first rate cuts by then. Energy costs, one of the main drivers of inflation, could have become more calculable by then. And real estate prices will also make it clearer where the journey is headed.
Compared to the usual 20 to 30 year financing period for a home, the few years of waiting doesn’t make all that much of a difference. The current generation of potential buyers can still get a chance, they just have to keep their nerve and persevere.
More: Real estate slump significantly burdens financial service provider Hypoport – “Not experienced in 25 years”