The real estate boom is drawing to a close. Rising interest rates, falling financial markets and a weakening economy are likely to make investment properties less attractive. The private residential property market is doing slightly better at the moment.
Real estate consulting firm Iazi announced on Wednesday that real estate investors will have to rethink their investment strategy, given the return in interest rates. Due to the rise in interest rates, federal bonds are again an alternative. Ten-year federal bonds still yield a net yield of more than one percent. “The era of investment urgency is definitely over,” writes Iazi.
High immigration as support
According to Iazi, price development indicates that investment properties are becoming less attractive. However, price correction is currently being made against the fact that rising interest rates also increase the reference interest rate, which is decisive for rents. Combined with high inflation, this allows rents to adjust. In addition, high immigration, decline in construction activities and low vacancy rates supported the investment property market.
However, there could be a price correction. After all, retirement plans are not allowed to invest more than 30 percent of their total investment in real estate. But if stocks and bonds – like this year – depreciate too much, real estate share will rise above that quota. According to a bank survey, this is currently the case for about a quarter of institutions. Therefore, there may be sales to meet the quota again, Iazi continues.
Stable situation with private residential property
By contrast, the private residential property market is somewhat more friendly. Here, the corona pandemic triggered a real boom phase, especially in detached houses. There was also a great demand for rental houses in mountainous regions.
There may be a slight price correction for condominium from the fourth quarter. This transaction is shown with prices. Detached houses, on the other hand, should develop steadily. However, the return in interest rates has made the situation even more difficult for those who want to buy. Ten-year fixed-rate mortgages cost more than 3 percent — much more than at the beginning of the year. And interest rates are likely to continue to rise. Many homeowners would feel it if they had to renew their fixed-rate mortgages at higher interest rates. (SDA/uro)
Source :Blick
I’m Tim David and I work as an author for 24 Instant News, covering the Market section. With a Bachelor’s Degree in Journalism, my mission is to provide accurate, timely and insightful news coverage that helps our readers stay informed about the latest trends in the market. My writing style is focused on making complex economic topics easy to understand for everyone.
