Can we really afford this, and will the bank support it?

2025-04-24 12:36:17

In real terms, property prices have rather fallen even in sought-after locations, and compared to the stock market, the nominal price development is weak. Of course, this was different in the 10 years before, and this image has firmly imprinted itself in your mind. However, the property price development from the mid-90s to the financial crisis was less favorable in Germany, and something similar can happen again if the causes of the increase are reversed (economic boom, interest rate decline, strong immigration).

2025-04-24 12:47:56

In real terms, property prices have rather fallen even in the sought-after locations, and compared to the stock market, the nominal price development is weak. Of course, it was different in the 10 years before, and this picture has become ingrained in your mind. Only: the property price development from the mid-90s to the financial crisis was less favorable in Germany, and something similar can happen again if the causes for the increase are reversed (economic boom, interest rate decline, strong immigration)

You can also arrange everything the way you want. Less favorable means there are better investments. But that’s not what it’s about. You are completely digressing from the topic. Maybe throw in some inflation swings, debt devaluation through inflation, wage increases in the future, etc.

And no, I have been working in the real estate market for 30 years. We write studies every year about the regions in Germany and the various asset classes in real estate. I am quite deep into the subject and personally know all the crises in that time, all developments – prices, construction costs, and interest rates. Nothing has become ingrained there.

Apart from that, a price development of at least doubling or more in metropolitan areas/metropolises/top locations and 50% in rural areas in absolute numbers over about 10 years (mid-90s to the financial crisis) is not really weak.

If such a “weak” development recurs in the next 10 years, I wouldn’t complain.

2025-04-24 13:17:21

You can also adjust everything as you like. Less advantageous means there are better investments. But that’s not the point at all. You are completely straying from the topic right now. Maybe a few inflation shifts, debt devaluation through inflation, wage increases in the future, etc.

And no, I have been working in the real estate market for 30 years. Every year we write studies on the regions in Germany and on the various asset classes in the real estate sector. I am quite deep into the subject and also personally know all the crises during that time, all developments – prices, construction costs, and interest rates. Nothing has become fixed.

Apart from that, a price development of at least doubling and more in metropolitan areas/urban centers/top locations and 50% in rural areas in absolute numbers over about 10 years (mid-90s until the financial crisis) is not really weak.

If such a "weak" development happens again in the next 10 years, I would not complain.

I would like to have these numbers. To my recollection, prices remained nominally stable over many years around the turn of the millennium and therefore fell significantly in real terms. Only in this way can the rally afterwards be explained: unlike other countries, Germany had a considerable need to catch up. Real estate was too cheap. Locally it may have played out differently with nominally significantly falling prices in rural areas and an increase in the city. By the way, in the early 90s we had a similar situation to today with extremely high immigration. However, there was one difference: construction was going wild, and with the decline in immigration and the aging population, pressure was taken off the market. There were also several major bankruptcies in the construction sector that even occupied then-Chancellor Schröder.

2025-04-24 13:34:54

Price indices indicate stagnation from the mid-90s to around 2010. But that is just the average for all of Germany. In East Germany, there was still a lot of inventory that was sold for a symbolic 1 EUR, and the East's upswing did not materialize. In the metropolitan areas, especially in the West, there probably was not complete stagnation either. However, stagnation was also present in other European countries – in the USA even with a sharp drop in average prices, which ultimately contributed to the 2007-8 crisis.

2025-04-24 13:43:19

Price indices indicate stagnation from the mid-90s until around 2010. But that is just the average for all of Germany. In East Germany, there was still a large inventory that was sold for a symbolic 1 EUR, and the Eastern upswing did not materialize.
In the metropolitan areas, especially in the West, there probably wasn’t complete stagnation either.
However, stagnation was also present in other European countries – in the USA even with a sharp drop in average prices, which in the end contributed to the crisis of 2007-8.

Nominal stagnation means a real price decline of 30%. That is a big deal. Internationally, there was the deep slump from 2007-2010, which of course did not occur in Germany. Naturally, it looked different regionally in Germany. But East Germany is not large enough to explain a real price decline of 30%. On a broad scale, prices in Germany could not have risen at all, although there have certainly been individual exceptions (Munich).

2025-04-24 21:35:52

I live in Bavaria. I would like to have a property that has stagnated for such a long time.

Can we really afford this, and will the bank support it?

Haus123

nordanney

Haus123

Tolentino

Haus123

schubert79