The rapid rise in interest rates in recent months is making financing more expensive and depriving many investors of their desire to get involved in the real estate market. In a study, the German Economic Institute is examining the question of whether this is a permanent trend or whether falling interest rates can be expected again in the long term. The experts led by Professor Michael Voigtländer see reasons for a dominant negative interest rate trend that is driven by demographic developments. According to the study, this prospect is likely to strengthen demand for real assets such as real estate.
Comment by Dirk Hasselbring
If you follow the economists at IW Cologne, the current phase of rising interest rates is of a temporary nature, while the long-term interest rate trend is downwards. They expect that the prospect of falling interest rates again will increase demand for safe investments such as real estate. They also see reasons to assume that investors are more interested in long-term interest rate expectations than in short-term developments. All of this suggests that the current dampening of the real estate markets due to interest rate increases is more of a “scare moment” and will dissipate in the foreseeable future.
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