December 22, 2022, 10:09 am | Read time: 4 minutes
The real estate market is in flux. While the situation in urban centers is becoming increasingly critical, the demand for affordable housing continues to rise. myHOMEBOOK spoke with a real estate expert about the current situation and what opportunities are still available for interested parties. What does the real estate market hold for 2023?
After years of steadily rising mortgage rates, there is currently a sign of some relief. What does this mean for homebuyers? Is the bubble finally bursting? myHOMEBOOK real estate expert Christopher Hnida is an independent broker in Berlin and keeps an eye on the developments. In a video interview with editor-in-chief Felix Mildner, he assesses the current state of the real estate market and takes a look at 2023.
»The Real Estate Market Remains Dynamic in 2023
myHOMEBOOK: What is the current state of the real estate market?
Christopher Hnida: “The real estate market is dynamic. After about a decade of low mortgage rates and steadily rising prices, the demand side has weakened somewhat, not least due to the increase in financing costs. This condition is temporary. Although a significant drop in interest rates is not foreseeable in the medium term—quite the opposite—the fundamental demand for housing remains very strong and continues to grow in urban areas.”
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Can an “average person” still afford to own property?
“It is clear that rent is essentially ‘worn out’ and the money paid is irretrievably gone. Those who acquire owner-occupied property invest in their future by repaying the loan. Of course, the sensibility of a real estate purchase depends on it being financed healthily. The rule of thumb no longer applies that a maximum of one-third of the monthly net income should be paid as an annuity, meaning interest and repayment.”
How can I find out if I can afford a property?
“It is worthwhile to talk to a financing expert. The first step can be the house bank, which already has a good overview of individual creditworthiness. However, it is definitely advisable to consult an independent financial advisor who is not tied to a bank. They can provide financing offers free of charge and without obligation, allowing you to compare.”
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»A Slight Reduction in Purchase Prices is Foreseeable
The situation seems to be improving at the moment—what’s next?
“Currently, financing costs have decreased slightly. In the medium term, it is likely that interest rates will rise again. However, since the demand for housing remains unbrokenly high, it is foreseeable that interested parties who are currently holding back will eventually make a move. A slight reduction in purchase prices is foreseeable, but there will be no talk of a price collapse. Every market is cyclical—the current situation should not panic buyers or sellers.”
What advice would you give to every real estate prospect?
“If you don’t know better yourself, it’s wise to seek professional advice when buying or selling a property. Not only the process of acquisition but also the purchase contract, land register, or declaration of division can raise questions. It is important to get competent support and have things explained.”
What are the most common mistakes in buying real estate?
“It is clear that everyone should understand what they are doing. This involves not only the actual purchase and the rights and obligations as an owner but also the financing. After the interest rate is fixed—typically for 10 years—the loan or the remaining balance is renegotiated. This circumstance should be considered and taken into account when buying. The coming years may bring some offers to the market where the owner can no longer refinance the property under new conditions.”
“But also not taking advantage of all possibilities to make the real estate purchase as affordable as possible is a mistake often made. For example, if furniture such as a fitted kitchen is purchased, it can save on real estate transfer tax. Also, dividing the purchase price into the property itself and the share in land makes sense if the property is to be rented out.”
»The Buyer Gains Importance
What do you think should change in the real estate business?
“In recent years, the seller side clearly held the reins. The current market situation regulates this, so it can be assumed that the buyer gains importance. Real estate providers must learn to come closer together and open up to cooperation among themselves.”
“A good example of a well-functioning system where brokers network and it is not uncommon for one to provide the buyer and the other the property can be seen in the U.S. The current movement in the market offers opportunities to establish a system from which both professionals and consumers can benefit.”