Buying property: Do not be put off by price developments
An unusual suggestion: Currently, prices for real estate are soaring. Nevertheless, interested people should strike now. Why? There are two reasons for this: prices will not decline in the foreseeable future, and the historically low interest rates will have to be used easily. According to the Landesbausparkassen (LBS), prices for real estate in the current year could rise by two to 3.5 percent . Demand will also not stagnate in the foreseeable future, pushing up prices further. Especially in big cities and their metropolitan areas like Berlin, Munich and Hamburg, prices will increase even more. According to the Institute of the German Economy (IW), the price increases here could amount to up to nine percent.
High prices, nevertheless buy
In view of such growth rates, interested parties should rather wait, do not they? Wrong: Who is looking for a property, should not look at the price jumps within a year, but think long term . The price trend should always be tracked over several years. Small outliers in a year then fall so much in the weight. It is true that the growth rates of recent years can not be taken over into the future. However, that small cities do not suddenly experience a population influx, should be clear. Much more, it should be assumed that the value of a property in metropolitan areas rises . Because here the population is growing permanently, the housing construction can often not keep up. 10,000 new apartments are needed every year in Berlin, but only 3,000 are built.
No price bubble in Germany
The experts are confident in one respect: In Germany, does not build a price bubble USA, Ireland or Spain. Whoever buys a property today, does not have to expect that the value of the house will shrink by a third within a few years. One argument why this does not create a risk of blisters in the cities is the following: The prices of real estate rise in line with rents. Thus, the return remains stable . Added to this is the fact that the number of employees is increasing, as well as the income and the demand for housing are rising.
So-called price bubbles are usually fueled by cheap loans. Although interest rates are currently at a low level, only slightly more loans are granted in Germany than a few years ago. From January 2003 to April 2012, were given only 7 percent more loans for home purchases. Over the same period, lending in Ireland and Spain blistered more than 150 percent.
Do not Go Debt
Buying a property is a big step for any family, whether it's very good or just average earned. The danger of unemployment or sickness is always present. Those who have not taken appropriate precautions or insured, are quickly facing financial ruin. The risk of indebtedness exists especially in so-called threshold households . This refers to families who can afford a monthly burden of amortization and interest just because of current low interest rates. In order to have to pay very little interest, often even a fixed interest rate of five years is chosen. There is a high risk that the family will not be able to pay the follow-up rates because the interest rates are too high after five years. Almost calculating families should refrain from buying a home if they can not repay a loan for more than 20 years.
Example : A family wants to buy a house worth 300,000 euros and needs a loan of 200,000 euros. The family receives favorable offers with two percent repayment, an effective interest rate of 2.1 percent and a fixed interest rate of five years. Monthly, 680 euros are transferred to the bank. The 20-year loan is available for 3.2 percent effective interest, which is 867 euros due. If you transfer 260 euros more per month (1,127 euros), you already have a debt-free house after 20 years.
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