For several individuals, the idea of investing in the residential German property market has never seemed that feasible. However, having this perception may have been a bad decision.
Germans are happy enough with long leases that allow housing without the need for debt or the stresses of landlord responsibilities. This, in turn, has meant a flat growth rate in housing prices.
Several foreign buyers are beginning to search the world for reliable places. Germany is an attractive hotspot, as it has a balanced economy and steady growth rates. Mortgage rates have dropped as the European Central Bank moved to negative interest rates, which has sparked this popular trend even more.
The recent changes have steered the Germans towards the property market, it is seen as a steady and low-risk asset. For many German people with permanent jobs, renting no longer makes any sense.
Countries that offer mortgages are doing so now at super-cheap rates. For example, in Commerzbank, they are offering fixed rates of just 0.94%. This is a clear advantage for German buyers and for other international buyers who are looking to purchase property in the country. This is also an indication that the German property market is on an inclining ‘up’.
A drive for the rental market is the increase of refugees, which means the population is increasing too. This has led to a housing demand that to be realistic, has been hard for the market to keep up with.
Estimating how many refugees will stay in Germany is a difficult thing to say. If many do decide to stay there then the country will have to provide more housing supply.
They built approximately 270,000 new apartments in 2015 but that figure needs to rise to about 430,000 a year until 2020 to meet the shift in demand.
The German government is planning an increase in subsidy for public housing as part of its 2017 budget plan.
It is a wise move to weigh up all of the strengths of the German property market, the effects of the migrant-driving housing boom and the directions of the interest rate to decide whether the country is worth investing in.
Written by Gemma Smith
