Expert warns: the Current crisis, pressed by real estate prices

According to a study by the Institute of German economy (IW) in Cologne, the Corona could lead pandemic to a decline in the residential real estate prices. The

Expert warns: the Current crisis, pressed by real estate prices

According to a study by the Institute of German economy (IW) in Cologne, the Corona could lead pandemic to a decline in the residential real estate prices. The "Welt am Sonntag" reported, citing the data obtained.

Declining tenant maintenance charge real estate prices

The continued suppressed economic Lockdown as a result, on the real estate market: "on the basis of possible bankruptcies and increased unemployment, the future rent should be reduced expectations, because the house is less income overall is available", - stated in the IW study. The could "have a negative impact on housing prices," concluded the study authors.

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Already, in a previous study of the IW Cologne had pointed out the difficult situation for the real estate market: "Even in quiet times it is challenging, the willingness to pay for a property. Anyone who buys a property, it needs to ultimately develop an idea about the development of the Rent at a particular location over the entire useful life of the property and also take into account how interest rates will develop over this long period of time." This is currently hardly possible.

the regions with the high Rents more

from affected, However, the corona effect-related real estate crisis, not in all market areas. "There are individual market segments that are likely to be more of a short-term decline in demand affected – for example, micro-apartments, where the mobile professionals cease to apply as a tenant, or about the apartments in the luxury segment," said Michael Voigtländer, a real estate expert from the IW, told the newspaper.

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In high-priced regions, the threat of a greater risk of price return. Expert Voigtländer southern Germany for example. Here, the "Rents relative to wages were already before the crisis relatively high," the IW employees. He points to other effects: "In some locations of the structural change in the auto industry, so that rent increase expectations and thus prices may greater go back." The centres of the German automotive industry, among others, Wolfsburg and Zwickau (VW), Stuttgart (Daimler, Porsche), Munich (BMW) and Ulm (Audi) are. Real estate Atlas 2020

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Falling mortgage interest rates could slow effect

The study mentioned, but also the possible opposite aspects: falling mortgage interest rates could limit the price decline. "We think it's quite possible that the mortgage rates go back," said Voigt of the countries of the "world".

The European concern Central Bank ( ECB) with a lot of cheap money for low interest rates. The could at any time lead to significant declines in property rates, according to the expert. The have shown the past months on several occasions.

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Updated Date: 21 May 2020, 19:28

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