December 22, 2022, 10:09 am | Read time: 4 minutes
The real estate market is in transition. 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 remain for interested parties. What will the real estate market bring in 2023?
After years of steadily rising mortgage rates, there is currently some relief in sight. 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 market. 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 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—rather 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 property?
“It is clear that rent is essentially ‘used up’ 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 paying no more than one-third of the monthly net income as an annuity—interest and repayment—no longer applies.”
How do I find out if I can afford a property?
“It’s worth talking to a financing expert. The first step can be the house bank, which already has a good overview of individual creditworthiness. However, it is advisable to consult an independent financing advisor who is not tied to a bank. They can provide free and non-binding financing offers for comparison.”
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»A Slight Reduction in Purchase Prices Is Foreseeable
The situation seems to be improving—what’s next?
“Currently, financing costs have slightly decreased again. In the medium term, it is likely that interest rates will rise again. However, since the demand for housing remains consistently 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 enthusiast?
“If you don’t know better yourself, it’s wise to seek professional advice when buying or selling a property. Not only the acquisition process but also the purchase contract, land register, or partition declaration can raise questions. It’s important to get competent support and have things explained.”
What are the most common mistakes when buying real estate?
“Clearly, 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 factored in at the time of purchase. In the coming years, there may be offers on the market from owners who can no longer refinance their property under new conditions.”
“But also failing to take advantage of all opportunities to make the real estate purchase as affordable as possible is a common mistake. For example, if furniture like a built-in kitchen is acquired, it can save on real estate transfer tax. Additionally, dividing the purchase price between 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 together and open up to cooperation among themselves.”
“A good example of a well-functioning system where brokers network and it’s 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 that benefits both professionals and consumers alike.”