Especially in the face of rising inflation, people rely on tangible assets such as real estate. However, other extreme trends are also emerging in this area, which should make it even more difficult for average earners to acquire real estate. While the costs for real estate of all kinds have risen to sometimes unattainable heights due to speculation, an uneven market, increased construction costs and reduced funding opportunities, financing is now becoming more and more expensive. In just a few months, the average interest rate for ten-year loans has tripled to around 3.1 percent.
The mortgage broker Interhyp expects real estate interest rates to rise further to between 3.5 and 4 percent by the end of the year. “A lot of people in Germany feel this rude awakening,” said board member Mirjam Mohr. According to Interhyp estimates, many interested parties can no longer afford their own house or apartment.
Last year there was a “last minute panic” on the residential real estate market, said the manager at the presentation of the company’s new “living dream study”. This year, many interested parties would have a completely different feeling: “I missed the train.”
The demand for real estate financing is still high – but at least some interested parties are no longer receiving financing commitments due to limited financial resources and high costs. Interhyp had 2,180 people interviewed for the study in February and March.
According to Interhyp, one consequence of the very high prices in the cities is urban exodus – with the effect that prices in the areas around Berlin, Frankfurt and Hamburg rose much more sharply in the first quarter than in the actual city. Mohr named Berlin as an example. In the Berlin area, prices shot up by more than 12 percent in the first quarter, but by only four percent in the city.
According to this, many city dwellers are forced to buy a house or apartment in a rural environment and are not very satisfied at first. “City, country, frustration,” said Mohr.
The reason for this are restrictions on the three Cs: social contacts, culture and consumption. According to the survey, at least 42 percent of rural property buyers struggled with their decision.
Interhyp does not expect a general, nationwide drop in prices for residential property. “We assume that prices will rise more slowly,” said Mohr. In some regions there could definitely be price declines, but not across the board. Many investors have already benefited from the increased real estate and land prices in recent years, including not only homeowners, but also investors who have been able to make enormous profits without much effort. The trend could thus further widen the gap between rich and poor.
In Germany alone, around 3,100 super-rich already own more than a fifth of all private financial assets. The club of the super-rich, each with financial assets of more than 100 million dollars, grew by around 300 members last year.
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