Germany in 20 Years: What Real Estate Buyers Must Make Today
Demographic change - two words that many countries on earth, especially in Europe, will face in the coming years. The topic should not be overlooked by consumers who would like to acquire a property in the foreseeable future, because they too are affected.
BBSR study on population development
At the beginning of July, the Federal Institute for Research on Building, Urban Affairs and Spatial Development ( BBSR) a forecast on population development and how it will affect the housing market in the coming years (until 2035). The result: the population will fall by around three percent to 78.2 million people.
Is this development in the real estate market not to be described as positive? Finally, the need for apartments should decline. Wrong thinking, because with the declining population comes another development: There are more and more single households. This evolution is connected with various factors. Many people no longer regard marriage or life as a neigbourhood with a partner.
As part of this development, demand continues to grow in the major cities of the Federal Republic. On the other hand, there is a demographic deduction in rural areas. The young people are moving larger cities and leaving behind an old population. According to the study, this trend will continue over the next few years.
The forecasts show that the economically strong metropolises are likely to see a strong influx in the coming years. That's why we need a large number of new apartments there.
Barbara Hendricks, Federal Minister of Building
Today a popular location, not tomorrow
That the real estate market is subject to constant development is now clearer than ever. The problem for home builders and homebuyers is the choice of a suitable location. They are often based on popular locations. But a location that is popular today does not necessarily have to be attractive in 20 years.
In terms of location, Germany's major cities have experienced the biggest price increases in recent years. In Munich, for example, the average price per square meter is over 4,000 euros. In the last few years alone, prices in the south of the country rose by 53 percent. Similar developments took place in Hamburg (+47%) and Berlin (+43%).
The situation is different in big cities like Dresden and Leipzig. Both cities are seeing falling prices. In Dresden, they fell by seven percent, in Leipzig by as much as 25 percent. Similar developments can be observed in Dortmund (-24%) and Essen (-26%).
So, if you want to fulfill your dream of owning a home in a metropolis, you should know that today, you could pay more for your home than it's worth in 20 years. Of course, if the real estate value is not necessarily of interest because the city has other positive qualities, it should not be put off.
Despite low interest rates do not rush
The change that Germany is expecting in the next few years could push real estate buyers and home builders to do so to become overzealous. This is always unfavorable in financial matters - this is especially true for the home purchase. Buying a property is associated with the biggest investment of a lifetime for most people. This would like to be planned in detail.
Of course, exactly this - the house stands in the center of a real estate purchase. It has to be found wisely. If you decide to build a house, consumers first have to find a construction company and plan the house. Both - house purchase and construction - thus require an advance planning, without considering the financing.
Only after the suitable property has been found, the credit requirements can be determined. Here many consumers make the mistake of wanting to profit from the low interest rates by using a small repayment. A redemption of just one percent sounds tempting, but whoever chooses three percent, wipes the house in half the time.
Who fears that the interest rates will rise, they want to secure, which is the forward loan available. These loans can be secured up to 20 years in advance. Home builders and homebuyers then pay a price for interest rate hedging.
These and many other things consumers have to consider when buying or building a home. Not an easy task for laymen, which is why it can be useful to seek external help. The Volkswagen Bank offers a so-called mortgage service (information on volkswagenbank.de), in the context of which the experts of the company find tailor-made loans. The customer merely describes his wishes and the experts take care to realize his dream as profitably as possible at the best conditions.
7 Errors that Germans make when buying property
Rash decisions, lack of knowledge and lack of information search lead to serious mistakes when buying a property. In particularly bad situations, they can even threaten the existence of the family. The following mistakes are typical when buying property:
- Insufficient equity : There are financings without equity, even if experts do not recommend them. A rule of thumb is that equity should account for at least ten to fifteen percent of financing costs.
- Few comparison offers : Given the current good market conditions, the conditions for real estate financing are very different. Since it is a large sum and a long financing period, even small differences have a positive effect.
- Time pressure : The mentioned hurrying is one of the biggest mistakes in real estate acquisition. Such an important buying decision can not and should not be made under time pressure.
- Scarce financing : Just as problematic as insufficient equity is over-funded financing. It should always have room to deal with unforeseen things without compromising quality of life. This refers to unemployment, an expensive repair or similar financial reasons.
- Buy without valuation report : The dream home is found, the price seems acceptable, although a little expensive. But who can estimate the price as a layman? If you think so, you risk paying too much. For an overpriced price, homebuyers can protect themselves with a market value appraisal. The report not only protects against overpriced but also cheap real estate. The latter can show hidden damage.
- Abandonment of incentive measures : The acquisition or construction of real estate is now being promoted by the state, Länder and municipalities. The subsidies are of a different nature, so that consumers have to individually check which of them is eligible for their own project. What is certain is that every promotion brings with it a financial advantage and is worthwhile for that reason. So it does not matter if it's a housing premium or a KfW grant.
- No vision : Buying or building a property is a measure for the future. With the purchase or construction you want to offer your family a home for life. But families rarely even think about what their future will look like.
Building and Buying for the Future
The last mistake from the previous section needs to be addressed more precisely because it is linked to demographic change.
Germany's population is getting older - this fact is currently ignored. In addition to the fact that the population is decreasing, this factor is added. It directly influences living and living, which is why it is very important to prepare for this change at an early stageThe increasing shortage of space in cities and the general rural exodus requires forms of housing that can deal with an aging population. Not all old people will be able to move into a nursing home. Many of them need and want to live at home. This is not possible in classic apartments. Accessibility will be a big topic in the next few years. Apartments must be designed so that age-appropriate living is possible.
On the other hand, consumers are advised to live a healthy life. A healthy life ensures that the risk of developing diseases such as dementia is less.
Germany's populations will become smaller and older over the next 20 years. This development presents certain challenges for the German real estate market. Homeowners and buyers should not be disturbed by this development and brought to a rash decision regarding their home purchase. Nothing changes in a house purchase: it has to be planned and prepared in detail as before.
Artikelbild: © Dominik Michalek / Shutterstock