Expectations for an increase in real estate prices in Germany during the upcoming period
Real estate prices in Germany have increased by more than 81 percent over the past decade, according to the IFO Institute. Economists anticipate a continued rise in property prices in this region and around the world. However, there is one area that is particularly affected by these developments.
Economists’ forecasts at the global level indicate a sharp increase in property prices, with an expected average worldwide annual rise of 9 percent over the next ten years, according to a survey conducted by the IFO Institute in Munich in collaboration with the Swiss Institute for Economic Policy Research, involving 1,405 experts from 133 countries.
Germany is expected to witness an increase in prices by 7.2 percent, Austria by 6.9 percent, and Switzerland by 4.8 percent.
Researchers attribute the “increase in real estate prices more to demand factors rather than supply factors,” according to what Timo Wöchner, the researcher at the IFO Institute, stated.
The forecasts indicate that improvements in the standard of living and higher incomes, coupled with a desire for larger living spaces and population growth, are leading to an increased demand for real estate in many regions around the world.
37% of the respondents mentioned that these reasons are what drives them to anticipate a significant increase in prices, and the shift towards remote work also plays a role in this context.
Faulkner explained:
“Supply factors, such as limited production capacities, increasing construction material prices, and a shortage of land allocated for construction, are responsible for a 27% surge in property prices, according to experts.”
While 12 percent of the respondents indicated that central bank monetary policies, inflation, and government policies would serve as drivers for expected price increases.
Western Europe and the United States are below the global average
It is expected that inflation rates in Western Europe (6.4 percent) and North America (7.7 percent) will remain below the global average.
While South and East Europe are expected to experience much higher growth rates (18.4 percent and 14.9 percent, respectively), real estate prices may witness remarkable increases in South and West Asia (25.1 percent and 22.4 percent, respectively) and Central America (24.4 percent).
It is worth mentioning that these numbers include nominal values, meaning they have not been adjusted for inflation. According to researcher Philip Heile from the IFO Institute:
Real growth rates are expected to be much lower as housing prices in Germany have risen by over 81 percent in the past decade, and this trend is expected to continue. In Austria, property prices have increased by 95 percent, and in Switzerland by 44 percent.
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