Unique opportunities for real estate buyers

Rising interest rates should not deter prospective real estate buyers from buying. Those who bring their own capital with them can now negotiate strongly with little competition and strike a bargain. Soon the property can be refinanced with favourable interest rates, writes IW real estate expert Michael Voigtländer in a guest article for Focus online.

Interest rates for real estate loans have quadrupled within one year. Demand in the residential property market has fallen. Since most people finance a large part of their property, the rise in interest rates has a direct impact on the affordability of home ownership.

Residential real estate has been one of the most stable asset classes for years. If you have a lot of equity, you can continue to invest your money in a secure way by buying a residential property and can even expect a return. As soon as interest rates fall again, the market for residential property will regain momentum - and this development can already be expected at the turn of the year 2023/24.

A historical review shows that the time from the last interest rate hike to the first rate cut was usually a maximum of seven months and on average five months. Most market observers assume that inflation rates will fall significantly again in the second half of 2023. The first interest rate cut in housing finance could follow as early as the beginning of 2024. Then long-term real estate lending rates would also fall.

As early as the second half of 2023 or the first half of 2024, buying could again be significantly more attractive than renting. For prospective buyers with a good equity base, the current market offers great opportunities. Those who pursue value preservation as an investment goal are likely to be right with a reasonable property in a reasonable location, even in the current interest rate phase. Investors with sufficient equity can also strike in the current interest rate phase and benefit from the declining competition.

Those who negotiate well do not have to write off the real estate market. Those who do not want to seek their fortune at the negotiating table should still be patient, because towards the end of the year construction interest rates could move in anticipation of a rate cut.

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