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Real Estate News - June 2022

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30.

June 2022

Housing costs: buying beats renting

Buying real estate is still cheaper than renting it in most cases. That's the finding of the new ACCENTRO Housing Cost Report 2022, which was compiled and published in cooperation between ACCENTRO and the Cologne Institute for Economic Research (IW). The report shows that buyers of residential property were better off compared with tenants in all 401 counties and independent cities in Germany in 2021. On average, buying a residential property with subsequent owner-occupancy was 59.2 percent cheaper than renting it. While the sharing of the broker's commission increased the cost advantage for buying, higher interest rates in particular had a negative impact on the cost advantage of buyers. Buying real estate continues to be particularly advantageous in the environs of major cities - even at higher interest rates. The Housing Cost Report shows the comparison of housing costs borne by owner-occupiers with rental costs. You can read the entire analysis here.

Sustainable urban development: Berlin ranks fifth worldwide

Berlin takes fifth place in the Sustainable Cities Index (SCI) 2022 of the consulting firm Arcadis. In a global comparison of 100 major cities in 47 countries, the German capital was particularly convincing in the "Planet" section, which evaluates environmental aspects, with numerous green spaces and a relatively low environmental impact. Berlin also scored well in the "People" category. Here, the experts consider societal and social factors such as health, education and crime. A total of 26 factors are included in the sustainability ranking. The Norwegian capital Oslo came first, followed by Stockholm, Tokyo and Copenhagen. The second-best German city was Frankfurt am Main in 16th place. You can read the entire report here.

Uncertainty and shortage of materials: Cancellations in residential construction

The German construction industry is increasingly feeling the consequences of the war in Ukraine. Due to the unsettled situation and sharp price increases resulting from a lack of construction materials, many investors are putting projects on hold for the time being. In April 2022, the Federal Statistical Office reported a 16.4 percent slump in new orders at German construction companies compared with the previous month of March. Compared with April 2021, the volume of orders fell by 11.7 percent. The main cause of the decline is the shortage of materials. According to a survey by the ifo Institute in Munich, almost 57 percent of the companies surveyed in the building construction sector reported a shortage of important building materials in May. According to the ifo Institute, order books are still well filled, but there is now an increase in the number of order cancellations, particularly in residential construction. While only 4.6 percent of the building construction companies surveyed were affected in March and 7.5 percent in April, this figure had already risen to 13.4 percent by May.

Residential real estate price growth loses momentum

The price momentum for residential real estate is slackening. This is shown by figures from the current Europace House Price Index (EPX). For the first time in a year, residential real estate recorded only moderate price growth in May 2022. Across all segments, the index increased by 0.25 percent compared to April 2022, recording a year-on-year increase of 12.73 percent. The largest price increase compared to April was observed in detached and semi-detached houses. According to Europace, rising interest rates in particular are having a negative impact on price dynamics. Nevertheless, the experts expect a high demand for residential property in the future as well. The EPX is based on transaction data for private real estate financing and has been compiled monthly since 2005. It started with a base value of 100 and stood at 224.71 points in May 2022. An overview of the development of the EPX can be found here.

Further readings

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Inflation and high interest rates - how can I afford real estate now?

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