Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Price rises in German housing market to ease but affordability worsen: Reuters poll

EconomyNov 30, 2021 02:10AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. A house is illuminated in front of the skyline of Frankfurt as the spread of the coronavirus disease (COVID-19) continues during a foggy morning in Kronberg, Germany, November 24, 2021. REUTERS/Kai Pfaffenbach

By Jonathan Cable

LONDON (Reuters) - Price growth in Germany's overvalued property market looks set to ease in coming years but affordability will worsen as supply constraints keep values elevated, offsetting a negative impact from tighter monetary policy, a Reuters poll found.

After soaring an estimated 10.0% this year prices will rise 6.0% next year, 4.0% in 2023 and 2.0% in 2024, according to the median estimate of 11 property market experts polled by Reuters Nov. 18-29.

But respondents were unanimous in saying affordability would worsen over the next two to three years.

"The continuing price increase, especially in metropolitan areas, will exclude an increasing proportion of the German population from owner-occupied housing," said Sebastian Schnejdar at BayernLB.

When asked what would help improve affordability, respondents cited tax deductions, higher wages, a faster building pace and reduced legislation, amongst others.

"To improve affordability, real estate prices would have to come down or wages would have to rise faster than real estate prices," said Carsten Brzeski at ING.

"Additionally, a decrease in mortgage interest rates would improve affordability."

Like its peers the European Central Bank cut interest rates to a record low at the height of the coronavirus pandemic and while a separate Reuters poll said it was not expected to increase borrowing costs until at least 2024 it will end its emergency asset purchase programme.

Inflation in the euro zone is well above the Bank's 2% target and in Germany, Europe's largest economy, it jumped to 6.0% in November - the highest rate recorded since January 1997, when the EU-harmonised series began - official data showed on Monday.

ECB board member and German economist Isabel Schnabel said earlier this month Bank policy cannot ignore a surge in property prices that has led to a potentially dangerous overvaluation.

Responding to a question on the level of house prices on a scale of 1 to 10 from extremely cheap to extremely expensive, the median response was 8.

"The judgment is two-fold: in metropolitan areas and their suburbs, prices have reached very high levels at 8-9, but rural areas, which continue to regain significance in the eye of remote working, are still more affordable," said Florian Neumeier at Interhyp.

Market watchers polled were split on what would have the biggest impact on the German housing market next year with seven picking supply constraints and seven selecting higher interest rates or tighter monetary policy. Some selected both.

"The desire for more properties, the smaller household size, etc. continue to generate more demand. Higher interest rates, inflation and tighter monetary policy are curbing demand," said Peer Hessemer at VON POLL Real Estate.

Price rises in German housing market to ease but affordability worsen: Reuters poll
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
So Nam
So Nam Nov 30, 2021 2:30AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
10% yearly increase of house prices, 6% inflation, minus interest rate for saving accounts, and 50% of your salary goes to government pocket as different taxes. Just rich people get richer and middle class is pushed down. The only thing left from socialism in Germany is high taxation. Pure capitalism is much better than this capitalism system with socialism face.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email