DeutschReal Estate: Preview for 2018
What goes, what stays, what comes
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Granted: In 2017, no real estate agent could complain about too little work. Anyone who has understood his business has preferred to work overtime without limits this year, rather than lying on his lazy skin.
Because the business was anything but easy.
In a time of rising prices, exorbitant and rapidly rising prices even, on markets as Munich, Frankfurt, Dusseldorf, Berlin, Hamburg, Stuttgart, Dreieich, Langen, Neu-Isenburg and a few more cities it was not easy to find objects, which could provide an adequate answer to the overwhelming demand for purchase opportunities.
And in Frankfurt and the surrounding area, a night ghost wanders around in broad daylight and murmurs with his lantern: "Brexit is coming, Brexit is coming" ....
... and with him the hosts of bankers and other employees of international financial institutions who are now looking for asylum in Germany like refugees.
Only that they are not war refugees, but the managers of those systems that we all feed on: the financial world.
But do they really come? And if so, what will be the impact on the real estate market, especially in and around Frankfurt?
Some say: prices continue to rise (even without Brexit).
Others now think that prices on the top regions are already stagnating.
The new building is booming. Residential towers shoot like the asparagus in the spring from the Frankfurt acres.
But let's take a look at some other factors that affect prices in the real estate market.
Undoubtedly, there is the low-interest phase, for investors the sixth year of drought, the seventh is imminent.
How was that in the Bible?
Then 2019 would be the year of interest rate reversal.
This will have an impact on the real estate buyers market. By the end of 2018, many will be pushing "into the real estate" again to benefit from low-interest loans.
The turnaround would then come in early 2019, after seven extremely dry years of the ECB's interest rate policy.
Another factor is at work, and has been around for about five years now:
Asia buys.
Numerous investors from the Far East - China, India, Vietnam, Hong Kong, as well as Arab and other countries - have brought their assets here to a safe haven.
And the stream does not seem to end. New buildings in the European district and on the Riedberg are already almost firmly in Asian hands.
First and foremost, this buyer flow is directed towards the new building.
And the new building boom takes off and seems to have no end.
In the vicinity of Frankfurt townhouses and semi-detached houses go flying like the Sunday rolls at Kronberger's in the Vogelsbergstrasse in Frankfurt. From plan to notary.
Second and third hand properties in Neu-Isenburg, Dreieich, Langen, Bad Vilbel and many other surrounding villages have gained 20% or more over the last 2-3 years.
Prices for building land have exploded.
And old hands shake their heads in disbelief and say: That can not go on.
Apartment blocks in Frankfurt are virtually non-existent for sale. And if then to 30-40 times the net annual rent.
Many investors say: Not with me.
And that brings us to another factor: The rents.
Admittedly, according to general agreement, the rent-price brake forcibly imposed in some cities remained practically without effect.
But the rents have not kept up with the price increases when buying.
Further restrictions in tenancy law and in the amount of rent are to be expected, no matter who decides in Berlin finally to take over the scepter.
So all in all, we have a trend that looks more like a slower price increase in 2018:
- Surplus of new housing in agglomerations coming onto the market
- Lack of willingness to sell by owners of apartment buildings
- Stricter rental pricing policy
- On the horizon waving turn in the interest rate policy
- Gradual reassurance among potential buyers who can wait for better opportunities
And our conclusion:
Us brokers will certainly not become unemployed!
For a good and common sense 2018.
Above all, to the preservation of world peace.
Happy New Year!
Your AllGrund team