The real estate market and the coronavirus: an interview
The coronavirus crisis continues to exert a firm grip on everyday life and the world of work. Given the raft of measures introduced to control the spread of Covid-19, our Head of Sales Tobias Bajtel addresses the pandemic’s impact on the real estate market.
Mr. Bajtel, what impact has the coronavirus had on the German residential real estate?
Fortunately, the residential market has come through the last few months almost entirely unscathed. Compared to other asset classes, real estate has always been particularly crisis-resistant. After all, whatever is happening in the world, people will always need somewhere to live. As a result of the market’s inherent strength, demand remains undiminished. In fact, over the last few months, we have observed an increase in residential real estate investments in Germany – including from abroad.
Is this also reflected in prices?
Given such strong and sustained demand, prices have remained stable and in some markets even risen, especially in Germany’s largest cities and metro regions. In conurbations such as Berlin, demand far exceeds supply, which is a major price driver. If you look at the market for owner-occupied homes, for example, prices across Germany rose by an average of 6.2 percent year-on-year in the first half of 2020. In Berlin, however, the increase was not quite as dynamic as prices rose by an average of 2.9 percent. The difference between Berlin and the rest of Germany is probably a combination of the city’s rent cap irritating buyers and the serious lack of supply. The trend for single-family homes was similarly positive. On average, prices across Germany rose by around 2.8 percent in the second quarter alone.
Has the coronavirus crisis altered buyer behavior? Has one type of property become more popular as a result of the pandemic?
Well, more people are working remotely and spending far more time at home. As a result, they are reassessing their priorities and rethinking their notions of the ideal home. They appreciate the benefits of having their own garden, balcony and study. Unsurprisingly, demand for apartments and houses with floor plans of 150 sqm and above has risen significantly. If anything, the current second “lockdown” is likely to fuel this trend. At the same time, many would-be homeowners are seriously considering the suburbs and exurbs, especially as they no longer have to commute to the office as often and are attracted by the opportunity to live just outside the city at relatively moderate prices.
Given the coronavirus crisis, is now a good time to sell your property?
Real estate is now in greater demand than ever before. In times of crisis, what we Germans call “concrete gold” is regarded as a safe investment. Although some investors are being put off by Berlin’s rent cap, demand for housing in the capital remains extremely strong. Prices are largely stable – in Berlin they are actually higher now than they were before the pandemic. It also looks as if interest rates will remain low for the foreseeable future, which makes homeownership a realistic option for even more people, which of course boosts demand. I think it is fair to say that now is as good a time as any to sell your property.
Are you interested in buying or selling a property? We would be delighted to advise you and provide you with a fair valuation of your property.
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