Germany’s housing market is facing a serious downturn in prices, analysts say – CNBC

The German housing market has been remarkably strong for decades, but it faces a serious fall in prices over the next couple of years, according to some analysts. House prices will drop up to 25% from peak to trough, forecasts Jochen Moebert, a macroeconomic analyst at Deutsche Bank. The German housing market has been remarkably strong in the last couple of decades, but it faces a serious price correction in the next couple of years, according to some analysts. Tim Graham / Contributor / Getty Images

The German housing market has been remarkably strong for decades, but it faces a serious downturn in prices over the next couple of years, according to analysts.

Mortgage rates have soared, with a 10-year fixed rate up from 1% to 3.9% since the start of the year, according to Interhyp data, which typically causes demand to cool as fewer people can afford to take out loans.

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House prices have already declined around 5% since March, according to Deutsche Bank data, and they will drop between 20% and 25% in total from peak to trough, forecasts Jochen Moebert, a macroeconomic analyst at the German lender.

“If you think about mortgage rates of 3.5% or 4% then you need higher rental yields for investors and given that rents are relatively fixed, it’s clear prices have to fall,” Moebert said.

Rental income is a priority for German investors, with approximately 5 million people in Germany receiving revenue from renting, according to The Cologne Institute for Economic Research, and the

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