Also in Hamburg: Bundesbank warns of real estate bubble


In the pandemic, your own four walls have become even more important. Real estate prices continued to rise in the Corona year 2020 – the Bundesbank is alarmed. Because despite low interest rates has the relationship between rent and financing costs in many large cities deteriorated – including in Hamburg.

 The re are signs that “the marked price exaggerations on the urban housing markets during the coronavirus pandemic … increased somewhat,” warned the central bank in its February monthly report published on Monday.

“According to current estimates, prices in cities were still between 15 percent and 30 percent above the value indicated by demographic and economic fundamentals.”

Price increase for real estate during Corona – also in the surrounding area


 The  broad-based, strong rise in residential property prices in Germany continued during the coronavirus pandemic, as the Bundesbank found. “This indicates that the regions outside the cities continued to gain in attractiveness.”


 The  Bundesbank referred, among other things, to figures from the Association of German Pfandbrief Banks (vdp), according to which the prices for residential property rose by 7.5 (previous year: 6.75) percent in the past year. But the Federal Statistical Office also reported a sharp rise in property prices at the end of December.


 The  boom is slowing the trend towards ever larger apartments

According to the Bundesbank’s assessment, “the importance of home ownership in households’ consumption plans may have increased permanently due to the restrictions to contain the pandemic”. According to a study by the Institut der deutschen Wirtschaft (IW), the price increases in the real estate market in recent years have already noticeably slowed the long-term trend towards larger apartments. Among tenant households in large cities, the average living space per capita has even declined in the past decade, according to an IW study published on Monday.

Compared to tenants: Owners live in larger apartments

However, calculations by economists based on the socio-economic panel show large differences in the distribution of living space. According to this, owners live on average in 125 square meters of apartments, while tenants live on 75 square meters – per capita it is 48 square meters for owners and 35 square meters for tenants. According to the study, the average living space per capita in Germany has increased by 34 percent since 1990. Since the start of the real estate boom in 2010, the increase has slowed noticeably.

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This is mainly due to the development among tenants, reported the employer-related IW. ©

 The  average living space per capita has stagnated here since 2010. In big cities it is even sinking. At the same time, the proportion of tenants who have less than one living space per household member is growing again significantly after having previously decreased for a long time. In contrast, the living space of the apartment owners has increased significantly. In the general population, according to the study, people with a living space of more than 41 square meters per capita belong to the top 50 percent, from 83 square meters per capita to the top 10 percent.

This is how migration and urbanization affect the real estate market

According to the study, trends such as migration, urbanization and demographic change are clearly reflected in the real estate market. According to the IW, the proportion of single-person households rose from 34 to 42 percent between 1990 and 2018. A maximum of two people now lived in three quarters of all households. Households with three or more people, on the other hand, would have lost their relevance for the housing market. ©

 The  proportion of tenants with a migration background rose from 25 to 32 percent between 2010 and 2018.

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Despite rising prices, according to a further IW study, condominiums have actually become more affordable in some major German cities. ©

 The  reason was lower interest rates, which made mortgage loans cheaper and more than offset the effect of rising prices, explained IW real estate expert Michael Voigtländer. However, many households could not benefit from this because they did not have enough equity to buy real estate and the associated additional costs such as notary and property transfer tax.


 The  relationship between purchase price, rent and interest has deteriorated in Hamburg

For the paper on behalf of the Düsseldorf real estate group LEG, the prices for residential property in 50 major cities in Germany were analyzed. In 38 of the 50 major cities examined, the amortization times for a mortgage loan fell between 2011 and 2020 if the difference between rent and financing costs is used as repayment, according to the IW experts. ©

 The  lower the interest burden, the more buyers can pay off their loan, which can give them an advantage over tenants.

In contrast, the relationship between purchase price, rent and interest has deteriorated in 12 major cities, including Berlin, Augsburg, Mainz and Hamburg. Overall, the affordability of home ownership has increased, according to Voigtländer. In almost half of the big cities, home ownership can be paid off within 35 years without being more burdened than a tenant. (dpa)

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Hamburg Bundesbank warns real estate bubble


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