The cost of real estate has risen sharply, while the number of construction projects in Germany is falling. There are several reasons for this, but in addition to higher material expenditure, the question of financing plays an important role. With the key interest rate hikes by the European Central Bank (ECB), construction interest rates have risen significantly since last year to almost 4 percent so far.
It is of little interest to a home buyer or homebuilder that this value is still below historic heights and that homeowners had to pay a higher interest rate decades ago. Anyone who currently takes out a loan to buy a house pays around three to four times more for interest than two years ago. This rapid change makes it difficult to desire to own real estate.
Especially since prices outside rural areas in Germany are now at a different level than in previous decades with higher interest rates. This is placing a heavy burden on the construction industry and the real estate industry as a whole: business is pausing in some places.
An end to the rise in construction interest rates is considered unlikely by observers. Inflation in Germany and Europe remains high, which is why key interest rate hikes are more likely to be expected from the ECB. If you currently have a real estate loan to handle, you should take care of the financing at an early stage. But if you don't buy your own home, you can console yourself: tenants remain flexible and can strike later if necessary.