Home prices on the rise!

Home prices on the rise

Home prices on the rise!

Home prices are rising, but the willingness to buy is still great. This combination alarms authorities: memories of the financial crisis are awakened.

One consequence of the corona pandemic is that the demand for homes has increased even further. This leads to prices in the housing market rising and rising. The reasons for the decision to own a home are the same worldwide, as a Deloitte study shows. In addition to cheap loans, it is the desire for more space in and after the pandemic and a certain investment crisis – because a lot of money cannot be spent at the moment. Adding to all this is the population growth in the cities and, among many, the fear that they will have to buy now before a home of their own may no longer be affordable!

Ratings go up According to calculations by the wholesale broker Knight Frank, valuations are rising faster than they have been since 2006. Of course, this brings back memories of the real estate bubble that burst in the USA in 2008 and shook the global financial system. In the US, the median home price is currently $ 350,000. That is almost twice as much as ten years ago. In London, for example, the average house price is £ 510,000. In a year-on-year comparison, this is an increase of 7.3 percent.

According to Statistics Austria, the average price for apartments in Austria was EUR 3508 per square metre in the previous year, and EUR 1739 per square metre for houses. “Real estate prices rose by an average of 36 percent between 2015 and 2020,” said Statistics Austria Director General Tobias Thomas at the end of May. Compared to 2019 alone, the prices for apartments rose by an average of 6.9 percent across Austria in 2020 – single-family houses rose by an average of 6.4 percent.

In Austria, the Financial Market Authority and the Oesterreichische Nationalbank have warned the banks to be more careful when granting loans. Because more than half of the new loans are financed with less than 20 percent of their own funds.

In Germany, the price increases in the second quarter of 2021 brought record increases with an increase of 16.4 percent for condominiums and 16.3 percent for single-family homes. This is shown by data from property experts Value AG. Nevertheless, they are bought, mainly because the interest rates on loans are low and will probably stay that way for a lot longer. This is gradually worrying the authorities.

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