Real estate offers not only a home, but also security - and it is a building block for retirement planning. But with prices so high, many doubt whether buying now still makes sense. Debeka, one of the largest insurance groups and building societies in Germany, has made a forecast for this reason.
The real estate market is booming primarily because there is a lack of investment alternatives - aided by the low-interest phase. Various factors play a role in price formation. These include location and infrastructure, age and condition, living space and plot size. The decisive factor, however, is the current situation on the market. Demand for real estate is so strong because interest rates for a loan are low and the necessary living space is scarce.
Some buyers are even willing to pay overpriced sums, even if the equivalent value of the property does not correspond to the purchase price at all. Particularly in the case of private sales, the asking price often does not reflect the actual market value because the necessary valuation documents from experts are not available. Therefore the prices lie with ten to 30 per cent of all dwellings and houses over that, which the data for land value and region actually say.
As long as real estate is in such immense demand and those willing to buy are prepared to pay overpriced sums, prices will not fall for the time being. On the contrary, prices will continue to rise, but only in some regions and at a slower rate of growth.
The German government wants to counteract this trend by stepping up the construction of apartments. It plans to build 400,000 new homes per year. However, experts doubt whether this target can be achieved quickly, given the shortage of building land, the bottleneck in the construction industry and the excessive bureaucracy. With the right amount of luck and secure financing, however, buying real estate is still a worthwhile investment.
(Photo: © Gerd Altmann, Pixabay)
