Update: COVIC-19 and the German real estate market

COVID-19 effects on the German real estate market

We have now been in the so-called “Corona crisis” for 8 weeks. So far, the real estate industry has gotten through the crisis pretty well. That will change, however, because the effects of loss of income or bankruptcies are yet to come. Still, there is no need to panic.

At our locations in Berlin, Brandenburg, Sachsen and Sachsen-Anhalt, we have seen that the crisis has very different effects on the real estate market.

The 5 most important effects on the seller side:

  1. Only in the capital there are fewer active sellers overall. Especially in Leipzig the sellers are still active and continue to offer. We even saw an increase in sales orders here, as well as in Magdeburg.
  2. Brandenburg is experiencing an unprecedented boom in sellers. We have never had as many sales orders in Brandenburg as we do now.
  3. Overall, high-priced properties are offered less than before the crisis. This applies to all locations. 2-3 room apartments in the city centers are particularly worth mentioning. The prime locations are currently not selling as well as they did before the crisis. But prices have not dropped. Sellers are currently just waiting. The marketing time has increased considerably. Many sellers of expensive properties are now withdrawing from the market and are waiting until after the crisis.
  4. Small single apartments and micro apartments in top locations are still the most popular type of apartment in a city center. Prices have even risen here. International sellers in particular focus on this property type.
  5. Overall, prices are stable. The only exceptions are old buildings in Berlin due to the effects of the rent price ceiling. There is an ever-increasing price gap between tenanted Berlin old buildings and vacant Berlin new buildings. By now even vacant old building apartments can only be sold with a price reduction of around 3-4%.

Advice for sellers: Sell ​​now and don’t wait. After the crisis, there will be fewer cash buyers than there are now. Those who come out of the crisis with more capital than before will be professional buyers, there will be less private buyers from the middle class. Expect longer sales periods, price reductions of around. 3-4% for investments (up to 5% in Berlin for old buildings) and stable prices for nice single-family houses or large condominiums.

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The 5 most important effects on the buyer side:

  1. The number of buyers only decreased at the beginning of the crisis. Meanwhile, the number of inquiries has recovered, and the quality of inquiries has risen again. We receive significantly fewer unqualified purchase inquiries than before the crisis.
  2. The buyers hope for bargains and want to negotiate a lot. However, there is hardly any scope here. Overall, there are many offers to buy at prices that are significantly below market value. Virtually none of this finds approval, regardless of location. The only exception: entire apartment buildings in Berlin and rented old apartments, here the purchase prices decrease.
  3. The type of demand has changed further during the crisis. Single-family houses, houseboats, properties in Brandenburg, building land and also farms, estates etc. are very popular. The urban exodus continues to increase.
  4. Real estate as buy-to-let or investment is cheaper than it has been for a long time. Buyers have particularly recognized this in Leipzig and Magdeburg. Berlin is avoided as an investment location by local buyers, with the exception of small new apartments.
  5. Price structure continues to shift. Demand is for either very affordable real estate, i.e. under € 100,000 in Sachsen and Sachsen-Anhalt, under € 200,000 in Brandenburg and under € 250,000 in Berlin. There is also strong demand for unique properties that are built individually for buyers for their own use. Price ranges here: Saxony € 400,000 – € 500,000, Saxony-Anhalt € 350,000 – € 450,000, Brandenburg € 300,000 – € 450,000, Berlin € 1,300,000 – € 2,500,000.

Advice for buyers: Buy against the trend. There are good to very good properties for sale in all locations. Now pay even more attention to the factors when buying, also when buying for personal use so that you remain flexible should you have to relocate for a different job. Do not speculate on falling prices but buy now what pays off.

Conclusion: The COVID-19-Pandemic acts as an accelerator of trends. What was already emerging before the crisis is accelerating further. There is less demand for the middle class of properties, whether for living or as a buy-to-let. The upper class, if really luxurious, and the entry-level objects, on the other hand, are selling all the better.

We are at your disposal for individual advice and analysis of owners or those who want to become one. Please contact us directly:

https://blacklabel-properties.com/properties/
https://sell-my-property.blacklabel-properties.com/

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Achim Amann

Achim Amann

Telephone: +49 30 – 921 43 046
Email: aa@bli.berlin



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