ECB Lowers Key Interest Rate for the Fourth Time

On December 12, 2024, the European Central Bank (ECB) lowered the key interest rate by 25 basis points to 3%, a step that experts had anticipated and which opens up new opportunities for property buyers in Europe. Construction interest rates have remained within a range of less than 0.5 percentage points for months, and are now at their lowest level in over two years. This creates attractive conditions for real estate financing, with the best rates around 2.90%. Experts expect the construction interest rates to remain stable over the year-end and into 2025, with no major changes anticipated. The crisis years of 2022 and 2023 appear to have passed, and the real estate market is expected to regain momentum. The fact that property prices, especially in metropolitan areas, are rising again could be a good reason for prospective buyers to act quickly. The further development of interest rates will be determined by international factors. U.S. government policies could influence inflation and long-term interest rates in Europe. If the U.S. President introduces tariffs, it could affect the German real estate market and increase financing costs.

Quelle: https://www.haufe.de/immobilien/investment/einfluss-der-zinspolitik-auf-die-immobilienmaerkte_256_572510.html

ZIA-IW Real Estate Sentiment Index: Improved Mood, but Uncertainties Remain

The Winter 2024 survey of the ZIA-IW Real Estate Sentiment Index (ISI) signals an overall improvement in the mood in the real estate sector, although skepticism and uncertainty still prevail. While the business situation has significantly improved from 2.0 to 18.0 points, expectations have slightly declined to 14.9 points. The combined real estate climate, which considers both factors, has risen by 6 points to reach 16.4 points. This moderate optimism reflects hope for falling financing costs and higher yields, which could provide much-needed momentum for the sector. Housing construction continues to act as a stabilizing factor. The ongoing high demand for housing, combined with slightly declining construction interest rates and government incentives, is supporting a continuous improvement in sentiment. After falling property prices in 2022 and 2023, the market is now stable. At the same time, the limited supply is driving rents up, which stimulates yields and investments. In the retail segment, signs of recovery and stabilization are emerging. The positive business situation and optimistic future expectations are attributed to rising consumer demand and successful adjustments to new consumer habits. Specifically, the integration of online and offline retail is having positive effects and providing new impulses for the sector. The situation in office properties remains ambiguous. While the trend back to working on-site is creating stable demand, economic uncertainties and muted expectations suggest a weaker development in the future. The market environment here is influenced by multiple, simultaneous factors, making it difficult to steer the industry in a clear direction. Even among project developers, the mood has slightly improved, mainly due to the prospect of falling interest rates. However, the burdens of high material and financing costs remain significant, so many companies are struggling with tight margins and financing difficulties. One key topic of the special survey was the upcoming federal election in February 2025. The sector sees a need for action, especially in the areas of administrative digitalization, reforming building standards to reduce construction costs, and eliminating planning law barriers. Other priorities include not extending the rent control and more reliable funding programs for energy-efficient modernization. Despite the improved mood, the industry remains in a transitional phase characterized by both hope and caution. The political decisions and a more favorable economic environment could set the stage for sustainable stability.

Quelle: https://www.iwkoeln.de/studien/ralph-henger-michael-voigtlaender-titel-ueberschrift-gutachten.html

Bundestag Debates Rent Control and "Building Turbo" Law

On December 19, 2024, the Bundestag discussed two key legislative proposals to alleviate the pressure on the housing market. The SPD and the Greens want to extend rent control until 2029 to curb rent increases. The proposed law would allow state governments to continue designating areas with tight housing markets. Additionally, rent control would now apply to apartments built between 2014 and 2019. The goal is to protect low and middle-income people from being displaced from their neighborhoods, particularly in light of high energy costs and rising inflation. On the other hand, the FDP is advocating for a "Building Turbo Law," which would accelerate the creation of housing through temporary special regulations in the building code. In agreement with local authorities, deviations from building regulations would be allowed to ease new constructions, modernizations, and conversions. The aim is to shorten lengthy approval processes and reduce construction costs to meet the growing demand for housing in urban areas. Both proposals were referred to the relevant committees after the debate. While rent control will be further discussed in the Legal Committee, the "Building Turbo Law" will be reviewed by the Committee for Housing, Urban Development, and Construction. These discussions are seen as crucial for the future development of the strained housing market.

Quelle: https://www.bundestag.de/dokumente/textarchiv/2024/kw51-de-miete-1034412