The great German property boom may have come to an end, according to a new study by the Cologne Institute for Economic Research (IW). According to an article in Welt am Sonntag, prices could begin falling as today’s buyers are wary of overpaying. The most basic reason for this is that the post-crisis world, whenever that emerges from quarantine, will feature a new type of consumer who has just experienced a drop in spending power. The IW study said this would be the net result of what looks like to be a coming wave of bankruptcies and increase unemployment that will drive down rental prices. The authors of the study point out that it had already become difficult for many people to pay for properties before the crisis erupted. At the moment, however, buyers may prove unwilling to acquire anything because it’s too difficult to guess how rental prices will move, given the sudden economic chaos, and what will happen to interest rates. The short-term, rents for micro-apartments are likely to suffer because of the sudden drop in demand for freelance specialists. Michael Voigtländer, one of the real estate experts at IW, predicted that rents in the luxury segment will fall, as will rents in regions that are high-priced overall. He sees these as particularly vulnerable because they were already seen as over-priced before the crisis in relation to wages. Structural changes to the nation’s automobile industry is only likely to speed the trend towards falling rents around Wolfsburg, Zviwckau, Stuttgart, Munich and Ulm.
