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IW expert Michael Voigtländer assesses the real estate market during the corona crisis

The corona crisis is shaking up the financial markets, Germany is in an economic crisis with unpredictable consequences. However, one sector appears to be able to withstand most of the pressure from the corona pandemic. Real estate experts Michael Voigtländer and Peter Hettenbach examined the current situation for real estate investments.

The Corona Crisis and the Real Estate Market

The corona pandemic has plunged the global economy into a crisis, the financial markets have reacted volatilely, and companies have seen significant drops in sales. The crisis is affecting almost every branch of industry, so the real estate market is not completely unaffected.

For years, real estate prices in Germany climbed purposefully. In Germany’s major cities in particular, nothing seemed to be able to counter the skyrocketing real estate industry.

The current question that real estate investors are asking is how low will prices fall in the coming months?

No long-term consequences for property prices

In Personal-Financial.com’s podcast “Zero Hour – Germany’s Way Out of the Crisis”, real estate expert Michael Voigtländer from the German Economic Institute (IW) reports on how the real estate sector is already responding to the crisis and how it is most likely to behave in the future.

Mainly the short-term consequences would play a certain factor, in the medium or long term the expert sees no precarious cuts in the real estate market. “The market is frozen. Hardly anything happens, ”Voigtländer describes the current situation. Nevertheless, real estate investments will come through the economic crisis more stable than other financial market instruments.

According to Voigtländer, the significance of the effects on the real estate market also depends on the intensity of the general economic crisis. If the economy falls into a deep recession, this will also be felt in real estate prices, so the real estate market and the global economy are in a positive correlation to one another.

Residential properties are proving to be crisis-proof

The expert assures, “Should there be a global economic crisis, the residential property market is our least concern”. Conversely, this means that the crisis will not simply reduce the demand for real estate, especially residential real estate. A slowdown or reversal of the price development of real estate can be expected, but this is not necessarily due to the Corona crisis. “Last year we saw that the boom was coming to an end,” said the expert.

Analyst Peter Hettenbach, who developed a software for determining residential property prices in collaboration with an institute in Schwetzingen, also has his say in the capital podcast.

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He also assesses the acute situation in a similar way to Voigtländer: “Overall, I believe that the residential property markets will be very resistant,” explains Hettenbach in the podcast. The expert draws this conclusion based, among other things, on analyzes that he has carried out using his software.

Accordingly, the calculations do not yet show price drops for German real estate.

Image sources: ktasimar / Shutterstock.com

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