In part, prices continue to rise, in part they drop extremely: Empirica predicts how it will turn out
Corona affects the further development of the residential property market.
The Empirica analysis company published a paper in early April entitled “Corona and the
Real Estate Prices ”released. It reveals which types of residential property continue to rise in price –
and who will be the losers of the corona crisis.
“Hotspots remain hotspots”
The value of homes, especially apartments or semi-detached houses, is said to the paper
according to the effects of the pandemic continue to rise: people will be affected by the many
Time they spend in their home, aware of how big their need for space and space –
maybe a balcony or even a garden. Self-used residential property is shown by
the corona-related exit and contact restrictions an increasing demand, so
Luxury properties are also safe from a price collapse, explains the FAZ – potential buyers
such as Russian oligarchs have enough financial resources even during an economic crisis
Resources for such purchases.
When demand drops, things get serious
According to Empirica, the situation is less good for investors who have expensive real estate with little
Have acquired equity and from it – through high rental income or resale too
higher prices – wanted to make a profit.
The paper illustrates how closely the value of the real estate offer is linked to demand:
This would decrease due to a lack of liquidity and uncertainty among potential buyers – and thereby
not only decrease the value of expensive investment property, but also that of
Junk property (“1950s, not renovated, at 6-lane intersection with aircraft noise,” says Empirica). On
the locations in Wolfsburg and Ingolstadt can do so due to the economic situation of
Automotive industry and the resulting job cuts lead to a market slump –
this would not be expected, but the development could then also have the value of
Influencing home ownership and semi-detached houses.
Overall, Empirica had a medium-term dip of 10 to 25 percent in purchase prices in April
forecast for residential property.
“Clarity is only available at Christmas”
So far, however, there is still no reliable confirmation or negation of the Empirica forecasts
possible, says Empirica managing director Reiner Braun to the FAZ: The previously published
Advertisements are not meaningful: “Above all objects came from the market, of which the
Sellers were certain that they could get rid of them at a good price even in the middle of the crisis. ”
Emergency sales could change the relationship between supply and demand – before
Real estate owners, however, would be drawn to emergency sales if they would only sell to others
Access resources. According to Braun, clarity about the situation can only be found in a few
Months, i.e. around Christmas.
However, Empirica already made relatively sure with the paper at the beginning of April that “at best
a recovery in purchase prices is to be expected from the end of 2021 ”. The Federal Association of Germans
Volksbanken and Raiffeisenbanken (BVR) nevertheless estimate an increase in 2020
average price of owner-occupied home by 4.8 percent compared to
Previous year. This number is slightly below the 5.7 percent figure from the previous year.
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And the property index shows: Overall, the property climate is this month compared to
The bright spot month of June fell again by 2.5 percent – the residential property asset class
is nevertheless experiencing growth of 3.3 percent and is now at 120.0 percentage points.
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