Stability of the Hamburg Real Estate Market during Inflation

Current crises such as inflation affect people's purchasing power - does this also apply to real estate? We explain how the Hamburg real estate market is changing and why investing in houses and apartments is still a good idea.

This is how stable the real estate market has been

In recent years, the price curve for real estate has been steeply upward. Houses and apartments for sale enjoyed great popularity and demand significantly exceeded supply. The Corona pandemic did nothing to dampen the joy of buying real estate. According to immowelt, the average price per square meter for an apartment in Hamburg in 2020 was around €5,280, which was around €730 higher than in 2018. Buyers paid an average price per square meter of 4,830 euros for a house in 2020 – in 2018, this was only 4,125 euros.

Rising inflation rate and high construction interest rates

Inflation has been rising rapidly since 2021 and has been at a record 10 percent since October – the highest level since 1951. Wondering how inflation affects real estate purchases? On the one hand, the European Central Bank (ECB) is raising the key interest rate as a result of the increased rate of monetary depreciation, which in turn is causing lenders to raise interest rates on construction loans. Added to this are the high costs of building materials and energy.

Continued profitable sales in Hamburg

One might think that the increased prices are having a negative impact on the real estate market in Hamburg. In fact, the city is experiencing a small downward trend. In the first quarter of 2022, the average price per square meter was approximately 5,760 euros and increased by 140 euros by the second quarter. In the third quarter, the average price is now back at around 5,760 euros. A cause for concern? No, because in the current times more and more people are looking for a crisis-proof capital investment and often decide to invest in real estate. So, on the one hand, demand is easing a little bit due to the higher prices, but on the other hand, it is increasing due to the search for a safe investment.

What’s next?

In these uncertain times, it is difficult to make forecasts. However, it is safe to assume that investing in a property and selling it will continue to be worthwhile. We at WEISS IMMOBILIEN are your experts for Hamburg and advise you comprehensively on the current market situation. In addition, we support you in value-enhancing measures such as refurbishment and modernization, so that you benefit from a profitable sale despite current events. Please feel free to contact us for a non-binding consultation.

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