Is real estate worthwhile as an investment despite higher interest rates?
Frequently, capital investors ask themselves
- Will there be a housing shortage?
- How high do real estate interest rates rise?
- How many new construction apartments do we need?
- Will construction continue to become more expensive in the future?
- Are enough apartments being built?
- Are increased loan interest rates a challenge?
- Does the yield increase when interest rates rise?
- Are there alternatives to tangible assets?
We answer these and many other questions in our video blog editions.
Here is the transcript of episode 10 to read:
Yes, interest rates have gone up. The main reason is inflation. And the effect is clear: everything is getting more expensive. Building will also become more expensive. So it is already foreseeable that the number of building applications, building permits and, above all, construction projects will drop rapidly in the next few years.
We actually need 400,000 new homes a year. 400,000 new apartments so that we don't have an exploding housing shortage. Unfortunately, far too few apartments have been built in Germany for 15, 20 years, and not even 300,000 apartments are completed on average. That's why we have a housing shortage. That's why investment properties are very good investments. Due to the rise in interest rates, construction is now becoming so expensive as inflation progresses that in a few years we may not even have 100,000 apartments still being built each year.
This means that the housing shortage, inflation and rents will become an even bigger problem because we have less and less housing, less and less necessary housing.
So if you take the chance and buy an investment property now, you will profit from it. Because your rental income will increase significantly in the future as a result of an increasingly scarce supply and also the value of your property when it is sold later, because there is too little living space.
Increased interest rates on loans are a challenge. They mean that you have to pay a little bit more today. But in return, the yield has also risen and will continue to rise due to inflation. So the outlook has become much better in a world with high inflation. So it's still worth buying an investment property with the increased interest rates.
Right now, we are facing a time when there are too few alternatives for tangible assets.
Inflation, construction is getting more expensive, real estate investment, appreciation, declining building permits, capital investment, 400,000 new homes, housing shortage, increased loan rates