Are property investments worthwhile as a capital investment despite higher interest rates?
Episode 10:
Are property investments worthwhile as a capital investment despite higher interest rates?
Investors frequently ask themselves
- Will there be a housing shortage?
- How high are property interest rates rising?
- How many new housing units do we need?
- Will building become more expensive in the future?
- Will enough housing be built?
- Are rising loan rates a challenge?
- Does the yield increase with rising interest rates?
- Are there alternatives to tangible assets?
We answer these and many other questions in our video blog episodes.
Here is the transcript of episode 10 for your perusal:
Yes, interest rates have risen. The main reason for this is inflation. And the effect is clear: everything is becoming more expensive. Construction is no exception. It is already foreseeable that the number of building applications, building permits, and especially construction projects will decline rapidly in the coming years.
We actually need 400,000 new housing units per year. 400,000 new apartments, so that we don’t get an exploding housing shortage. Unfortunately, for 15 to 20 years, far too few apartments have been built in Germany, and not even 300,000 apartments are being completed on average. That’s why we have a housing shortage. That’s why capital investment properties are very good investments. With rising interest rates, inflation is now gradually making construction so expensive that in a few years we may not even have 100,000 apartments that are still being built each year.
This means that the housing shortage, inflation and rents are becoming an even bigger problem, because we have less and less housing, less and less necessary living space.
So if you take advantage of the opportunity and buy a capital investment property now, you will benefit. Because with a shrinking supply, your rental income will increase significantly in the future, and the value of your property will also increase when it is sold later because there is not enough housing available.
Rising loan interest rates are a challenge. They mean that you have to pay a little more today. But the returns have also increased, and will continue to increase due to inflation. This has significantly improved the prospects in a world with high inflation. It is therefore worth buying a capital investment property despite the increased interest rates.
Right now we are facing a time when there are too few alternatives for tangible assets.
Keywords:
Inflation, construction will become more expensive, real estate investment, value appreciation, declining building permits, capital investment, 400,000 new housing units, housing shortage, rising loan interest rates
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