Would you buy a house now?

“Who should be able to afford a property at these prices?” writes a Handelsblatt reader. This week, the Federal Statistical Office announced that the prices of houses and apartments rose by 12.2 percent in the last quarter of 2021 compared to the same period last year – a record increase. We therefore asked the Handelsblatt readership whether they would still be buying a property at the moment.

A reader writes: “The question of ‘would’ does not arise, there is a lack of ‘can’.” At the current wage level for people under 40, the dream of a house is just that – a dream. Another reader adds: “The houses are not becoming more valuable, only more and more expensive.” However, there is disagreement as to whether a bubble is developing on the market.

Some readers see the reason for the current real estate prices in an “imbalance between supply and demand”. To remedy this, one reader suggests that the government curb investor demand and abolish the property speculation period.

Another sees the solution in more real estate. In order to achieve this, more building land should be released, higher storey buildings should be allowed and nonsensical building regulations should be abolished.

On the other hand, another reader believes: “Affordable housing would only exist if land and land as a common good were not in private hands and price-regulated,” and adds: “Municipalities should only be allowed to lease land on long-term leases.”

We have put together a selection for you from the various letters from the Handelsblatt readership.

Almost toxic mixture

“Who should be able to afford a property at these prices? The combination of rising energy prices, rising mortgage interest rates and soaring prices in almost every area is an almost toxic mix that will topple the already high prices. Many property owners will no longer be able to service their existing loans with new interest rate agreements, and there will again be a significant oversupply of properties, which inevitably leads to falling prices.

Bladder or not, it’s certainly not a good idea to buy now.”
Eric Suhall

interested in building

“We are currently building and have fallen victim to the new green symbolic policy: after waiting eleven months (!) for a municipal building permit – a period in which the price of our project rose by 150,000 euros thanks to the market situation due to Corona – we were All remaining ‘joy of building’ has been taken away by the KfW funding freeze: We are building an Energy 40plus house (!) and are dependent on subsidies due to the explosion in financing costs. Reading the ‘energy package’ that has now been decided is like a joke – ‘worst first’ – ie the targeted subsidization of old stock and the conscious punishment of builders who build new ones knocks the bottom out of the barrel.

We have now postponed the start of construction – but in view of rising interest rates, empty markets and global developments, at some point we have to ask ourselves whether it wouldn’t make more sense to start the project as soon as possible. The government can’t be relied on here anyway…”
Sabine Wiseel

The state should have acted long ago

“As a young family man looking for a house, I experience the rising real estate prices much more dramatically than the currently rising energy prices.

The state should have acted here long ago, but remains half-hearted in its measures.

Current real estate prices are the result of an imbalance between supply and demand.

Therefore, the state should also slow down the demand from investors and abolish the speculation period for real estate or tighten it significantly for owner-occupied real estate.

Residential real estate is ultimately vital and must not (as is currently the case) degenerate into an object of speculation.”
Jan Hettinger

>> Read about this: Six aspects that property buyers should now consider

If you want to make real estate cheaper, you have to increase it

“Scarce goods are always expensive, like real estate here. If you want to cheapen them, you have to multiply them. This can be achieved in a number of ways. Release more building land and allow higher-rise buildings, as well as abolish building regulations that are sometimes absurdly expensive and better promote social housing. Create rules for property developers that e.g. T. achieve gigantic profits through inflated overhead costs and thus drive up the final prices.

If more than a third of the household income has to be paid for housing, a social problem arises that can only be solved in the triangle of rent caps – income increases – consumption waivers. All poison for the market economy.”
Christian Hulsebeck

price structure must inevitably lead to distortions

“A price structure like the one currently prevailing on the market must inevitably lead to distortions. I cannot permanently exclude 80 percent of the working population from the market via the purchase price. Not only the utopian loan lengths of 30 to 50 years, but also the required rents lead to the collapse.

An investor won’t last long on a two percent rental yield, especially at this rate of inflation. This calculation model fails because the depreciation has to be higher because of the inferior construction quality.

The levers should therefore be applied to all relevant areas. Building land, production costs and the subsequent additional costs have increased insanely. If you now go into depth, you will find that the ‘state’ massively taxes all these points.

In the end it’s the unproductive waterhead with his obsession with regulation.”
Wolfgang Schmauser

Suggestions for solving the housing shortage

“Some suggestions for solving the housing shortage:

• Real estate and land must be placed under public control as a limited resource,
• Ban on speculation, setting upper yield limits,
• Right of municipalities to issue regulations on the type and scope of further use for each sale of real estate and land – priority of public interests,
• Municipalities’ right of first refusal in all real estate transactions,
• Determination of upper rent limits and land prices by municipalities,
• Limiting the size of private residential property to 100 times personal needs,
• Easier possibility of expropriation in case of repeated abuse of residential property,
• Reduction or exemption from the sales tax liability for social housing for the duration of the social commitment.

Claus Marx

Don’t think the bubble will burst

“I think there is a gap between the prices people are currently paying for real estate and their value. The turnaround in interest rates will reduce this price difference somewhat, but I don’t think it will burst like it did in 2007. The demand for living space is too great for that and the need for square meters per capita has increased too much in recent decades.

Currently I would only sell real estate. I don’t expect prices to fall more sharply until 2030, when more property owners will find peace and quiet.

Politicians should urgently ensure that living space for social welfare recipients is expanded in all cities and remains affordable.”
Dominik Rau

Houses are not becoming more valuable, only more expensive

“The prices for houses and apartments have been rising rapidly for a few years. The houses are not becoming more valuable, only more and more expensive. The prices do not match any services. We’ve had a real estate bubble since at least 2020.

Real estate interest rates have been rising for a few weeks. If later the homebuyer has to extend his loan, he will have a problem. Many will then probably have to say goodbye to their own homes.”
Jurgen Reich

An exact calculation is necessary

“The purchase is only worthwhile if there is enough equity. With external financing and the low rents in relation to the purchase price, an exact calculation is necessary.

There is also a risk of vacancies even in conurbations. Only those who can afford it should still buy.

I buy at a corresponding price (cash payment at least 80 percent) and in a location where, over the long term, renting is still possible and the yield brings a reasonable return.”
Hans Dieter Finkewirth

Who can still afford that?

“One million euros for a three-room apartment in Cologne or Düsseldorf. Who can still afford that? Unfortunately, politics in the ‘social’ market economy has no way of influencing real estate prices. Affordable housing would only exist if land, as a common good, were not privately owned and price-regulated. Municipalities may only allocate land on long-term leases.”
Karlheinz Hasibether

The dream of the house

“The question of ‘would’ doesn’t arise, it’s a lack of ‘can’. At the wage level for people under 40, the dream of a house is just that – a dream. If, even with the best interest rate level, the 300,000 euro house costs more than 1,000 euros in mortgage payments every month, then large parts of the population are priced out.

Finally, the question arises as to who owns these properties and who still buys them – and from what point of view?”
Christian Smith

Last week, Handelsblatt readers discussed whether it would really be better if energy for Europe came from Qatar or Saudi Arabia instead of Russia.

If you’d like to have your say on the forum, leave us a comment on the economic topic that’s on your mind most this week. Per email to [email protected] or on Instagram at @handelsblatt.