Price development in the property market - trends & forecasts
PRICE DEVELOPMENT IN THE PROPERTY MARKET
How do the different price trends come about?
Like any investment market, the property market is also characterised by certain fluctuations in value. In principle, the property market reacts more slowly than other asset classes, but ultimately - like any other market - it follows the logic of supply and demand. There are many different reasons for changes in demand. For example, property prices in general can rise - as has been the case for years - because banks can issue favourable loans for properties due to the historically low interest rates. Sometimes, however, it is also due to location-related factors. If an airport is built near a neighbourhood, prices may fall due to aircraft noise.
They can rise if the quality of life or just the image of a district improves due to the influx of higher-income groups or if an attractive park landscape is built. These exemplary parameters clearly show how the property value can change for the better or for the worse for the seller. Although property is generally a solid investment, prices can fluctuate in the short and medium term.
You should therefore always rely on a professional property valuation when selling your house or flat. You can obtain this from an experienced estate agent, for example. In addition to the factors mentioned above, they can also include other aspects in the valuation. For example, they have very good local knowledge and can assess future developments on the local property market. He is familiar with local price dynamics. They also view the property themselves. As a neutral person, they can better assess the extent to which, for example, the fixed interior fittings will affect the value or how sought-after the respective room layout is.
In addition, he not only looks at the property, but also consults the property documents to determine the price. The extract from the land register indicates whether price reductions due to residential rights or usufruct are to be taken into account. In the case of rented properties, it is interesting to see what is in the tenancy agreements and how high the net cold rents are. Ultimately, you will receive the optimum offer price, which is the prelude to a successful marketing process.
Property valuation and pricing
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VALIDITY OF THE PROPERTY VALUE
How long is a property value that has already been determined valid for?
Like any investment market, the property market is also characterised by certain fluctuations in value. In principle, the property market reacts more slowly than other asset classes, but ultimately - like any other market - it follows the logic of supply and demand. There are many different reasons for changes in demand. For example, property prices in general can rise - as has been the case for years - because banks can issue favourable loans for properties due to the historically low interest rates. Sometimes, however, it is also due to location-related factors. If an airport is built near a neighbourhood, prices may fall due to aircraft noise.
They can rise if the quality of life or just the image of a district improves due to the influx of higher-income groups or if an attractive park landscape is built. These exemplary parameters clearly show how the property value can change for the better or for the worse for the seller. Although property is generally a solid investment, prices can fluctuate in the short and medium term.
You should therefore always rely on a professional property valuation when selling your house or flat. You can obtain this from an experienced estate agent, for example. In addition to the factors mentioned above, they can also include other aspects in the valuation. For example, they have very good local knowledge and can assess future developments on the local property market. He is familiar with local price dynamics. They also view the property themselves. As a neutral person, they can better assess the extent to which, for example, the fixed interior fittings will affect the value or how sought-after the respective room layout is.
In addition, he not only looks at the property, but also consults the property documents to determine the price. The extract from the land register indicates whether price reductions due to residential rights or usufruct are to be taken into account. In the case of rented properties, it is interesting to see what is in the tenancy agreements and how high the net cold rents are. Ultimately, you will receive the optimum offer price, which is the prelude to a successful marketing process.
Property value Validity
Would you like to know how long a property value that has already been determined is still valid? Request your free consultation here.
PROPERTY PRICES IN GERMANY
Recognising excessively high property prices
When it comes to investing in a property, the performance of the property should be taken into account right from the start. The idea of investing in a bubble that is about to burst seems particularly disastrous. It is therefore interesting to recognise at an early stage whether a market situation is overheated or not. For an initial categorisation, it helps to answer three questions:
Are property prices still reasonable?
Very high property prices alone are not necessarily an indication of a property bubble. What is more important here is whether they are in a healthy relationship to rental and wage trends. It is therefore important to monitor these developments closely. Overall, both rents and salaries are rising continuously in Germany. On average, German households spend 20 to 40 per cent of their net income on rent. This suggests that there is no danger of a bubble forming. In Berlin, however, purchase and rental prices are drifting further and further apart. In popular locations in Berlin, within the S-Bahn ring, you can hardly find new-build flats for less than €7,000 per square metre. Here you should also consider how long it will take to recoup the investment through the rent.
Is the demand for living space being significantly exceeded?
Germany is still building too little to meet the demand for housing. This is particularly true in urban centres. In Berlin in particular, the demand for living space in sought-after neighbourhoods is not nearly being met. This is exacerbated by the ongoing trend of more and more people moving to urban centres - especially to Berlin. The capital is still growing by around 40,000 inhabitants per year. In rural regions, however, the situation is completely different. It is not uncommon for new housing estates to be built to meet demand. Buying a condominium is still worthwhile, especially in the neighbourhoods that are currently experiencing the strongest growth. In Berlin, for example, this applies to districts such as Charlottenburg, Moabit and Friedrichshain. Owner-occupiers also benefit from the attractive location of up-and-coming trendy neighbourhoods.
Are the owners' credit debts disproportionately high?
In the USA, a bubble deflated in 2008 as a result of an enormous structural overvaluation of property. A system of loose lending was established here over many years, which ultimately fuelled the rise in prices. Could something similar happen in Germany? This scenario is rather unlikely for Germany. The credit guidelines in Germany, in particular the requirements for the amount of equity, but also the legally regulated credit checks, tend to be too restrictive rather than too lax. In general, however, Germans have a completely different relationship to debt and are much more cautious when dealing with liabilities. In relation to gross domestic product, private household debt in Germany is around 60 per cent. By comparison, in Denmark it is more than 120 per cent!
