
Interest rates remain stable, purchasing power for real estate rises
In principle, the first key interest rate cut at the beginning of June this year can be seen as a positive sign. Although real estate prices fell by an average of 8.4 percent in 2023, they remain at a high level overall. If interest rates remain stable, purchasing power will also strengthen and the real estate market will pick up.
Is now the right time to buy real estate?
Anyone who has been planning to buy a property for some time should not put off their plans any longer. Experts expect real estate prices to rise again soon due to lower financing costs. Two aspects could become problematic for interested buyers: The limited supply will not meet the rising demand, and investors will become more active in the market to take advantage of the low financing costs. Lower interest rates generally encourage investment and have a significant impact on the dynamics and price development of the real estate market. It is therefore to be expected that the recent sharp fall in real estate prices will soon reverse.
What impact do stable interest rates have on purchasing power?
The ECB's reduction in the key interest rate has a direct impact on the financial markets. Banks can borrow money from the central bank on more favorable terms because they have to pay less interest. This leads to increased liquidity and makes financing more affordable for real estate buyers. Construction interest rates are also falling. Overall, lower interest rates make it easier to obtain loans and real estate financing, which ultimately leads to more properties changing hands.
Purchase prices still high despite stable interest rates – how to secure financing
Despite lower real estate prices, purchase prices for real estate in Germany remain high overall. Therefore, the right real estate financing is crucial for a successful real estate purchase. Buyers should disclose their financing options to make it easier for sellers to adjust to the market. In addition, equity of 20 to 30 percent of the purchase price is recommended in order to obtain financing from banks. Government subsidies for energy-efficient properties offer grants and tax advantages.
A local quality real estate agent can assist you every step of the way, from finding the ideal property and developing a suitable financing strategy to signing the purchase agreement.
Do you need assistance with purchasing real estate? Contact us! We will be happy to advise you and recommend independent financing experts.
Note
For reasons of better readability, the generic masculine form is used in this text. Female and other gender identities are expressly included insofar as this is necessary for the statement.
Legal notice: This article does not constitute tax or legal advice in individual cases. Please consult a lawyer and/or tax advisor to clarify the facts of your specific case.
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