dpa/GNA – After an unbroken real estate boom even during the coronavirus pandemic, economists expect somewhat less pressure on prices in Germany in the new year.
“The housing markets in Germany are surprisingly robust,” said Stefan Mitropoulos, economist and real estate expert at Landesbank Hessen-Thueringen (Helaba).
“No slump is expected, rather a breather.”
The pandemic will probably dampen price increases, he said. Instead of increases of 5 to 6 per cent per year, apartments and houses could grow at around 4 per cent in 2021.
Many experts had expected the pandemic to bring an end to Germany’s years-long real estate boom. But prices continued to rise – despite the economy slumping with millions of short-time workers and growing unemployment.
In the third quarter, real estate was 7.8 per cent more expensive than in the same period last year, according to the Federal Statistical Office.
Factors driving the boom remained intact, explains the Gewos Institute for Urban, Regional and Housing Research.
“These include the high demand for housing due to demographic factors, the shortage of building land and properties, and the low interest rate level, coupled with a lack of investment alternatives in uncertain times.”
However, pressure on major cities is likely to ease as more people flock to the surrounding areas and immigration of skilled foreign workers eases in the pandemic.
Michael Voigtlaender, a real estate expert at the Institute of the German Economy, does not expect prices to rise quite as much in the new decade after the recent boom.
“Interest rates on real estate loans have already fallen sharply, and the enormous upswing in the labor market cannot easily be repeated,” he said.