Shrinking EZB rates! Time to invest in German real estate now?

Is now a good time to invest in German property? Could there be a positive effect of low interest rates on german housing market?

Read more about low interest rates pros and cons for german property investors in the article below.

Source: European Central Bank, own calculations

In general, declining interest rates should lead back into more buying activity into the German real estate market since no other sector is as sensitive on the level of interest rates as the real estate industry.

After the EZB (European Central Bank) has announced on 06.06.2024 to make the first interest drop since 2016 and lower the key interest rates from 4.50% to 4.25% this could offer a great real estate investment opportunity in Germany.

Shrinking EZB rates - buy property in Germany right now?

Investing into German real estate property is getting more attractive again for several reasons:

• Lower borrowing costs: With lower interest rates, financing a property becomes cheaper. This can increase potential returns for investors and make it easier to qualify for mortgages.

• Increased demand from other investors: As other asset classes, like bonds, become less attractive due to lower interest rates, investors may shift their focus to real estate, driving up demand and potentially property prices.

CONCLUSION: After a two-year period of a relatively inactive property market in Germany which now seems to have found a bottom in its price corrections investors may find attractive potential to buy high yielding investment blocks supported by good finance conditions with the outlook of even further lowering interest rates.

But still before making an investment decision there are important things to be considered. Such could be:

• Market segment: The impact of rate changes might vary depending on the property type (residential vs commercial) and location.

• Long-term strategy: Real estate is a long-term investment. Don't base your decision solely on interest rates. Consider factors like rental yields, vacancy rates, and overall economic strength.

• Risk tolerance: The German housing market is relatively stable, but there's always a chance of price corrections. Make sure you understand the risks involved.

However, quality research is one of the key factors for a good basement for making great investment decisions. Our team in RG Immo Consult will stand at your side to help you to navigate towards a successful and sustainable journey in the German real estate property investment market. Contact us for more information on how to take advantage from EZB rate cuts with German real estate.