Geopolitical developments in the Middle East are creating widespread uncertainty, which is also affecting the property market in Germany. Expectations regarding energy prices, inflation, and interest rate trends, in particular, are influencing far-reaching financial decisions such as property acquisition. A recent online survey among experts from VON POLL IMMOBILIEN illuminates the direct impact of this situation on buying and selling decisions, as well as emerging market trends.
Daniel Ritter, Managing Partner at VON POLL IMMOBILIEN, notes increased caution and more intensive scrutiny processes on the buyer side. He states that this is a typical reaction to economic uncertainties and rising costs in the property sector, as purchasing property represents a long-term financial commitment. The survey results confirm this observation: 74.2 per cent of property experts report increasing reluctance among potential buyers, with 45.6 per cent registering slight reluctance and 28.6 per cent significant reluctance. Only 25.8 per cent report no significant changes.
This reluctance primarily manifests in longer decision-making processes. Prospective buyers compare offers in more detail, scrutinise financing more carefully, and take more time to select properties. This, combined with the currently more extensive checks by lending institutions, can lead to extended marketing periods. However, fundamental interest in home ownership remains unaffected.
Economic Factors as Primary Source of Uncertainty
According to the surveyed experts, the main reason for the observed reluctance lies in economic conditions. The current interest rate level, or the amount of financing costs, is cited as the most important factor by 74.7 per cent of respondents. Additionally, 52.5 per cent consider general economic uncertainty to be a relevant influencing factor. In third place, rising energy prices and the associated running costs are mentioned by 37.3 per cent.
- —Financial uncertainties regarding job security or income (23.5 per cent)
- —Geopolitical uncertainties (18.9 per cent)
- —Inflation and loss of purchasing power (18.9 per cent)
- —Ancillary purchasing costs and equity hurdles (17.5 per cent)
Daniel Ritter emphasises that it is less the geopolitical events themselves, but rather their potential impact on property financing and running costs, that are at the forefront of discussions with prospective buyers. The intensive consideration of developments in interest rates, energy prices, and the overall economic situation is understandable for a long-term decision.
Stability on the Seller Side
In contrast to the reluctance on the buyer side, the seller side shows stability. A majority of 75.6 per cent of the surveyed property experts report no changes in the number of owners withdrawing their properties from the market. Only 11.3 per cent of experts note that sales plans are somewhat more frequently postponed due to geopolitical tensions, while only 1.9 per cent observe a significantly higher frequency of postponement. A smaller proportion (8.5 per cent) even notes a slightly lower tendency, and 2.8 per cent a significantly lower tendency, to withdraw properties from the market.
The majority of owners' sales decisions are attributable to personal, family, or professional reasons, as stated by 67.1 per cent of experts. These include relocations, starting a family, divorces, inheritances, or age-related changes of residence. Rising costs such as for energy, maintenance, or necessary renovation measures also play a role, at 48.8 per cent. Uncertainties regarding market developments are considered relevant by 38 per cent of respondents, while increased financial need or pressure is cited by 30.1 per cent. Concerns about a loss of value represent a comparatively smaller factor at 24.4 per cent. The experts' assessment indicates that geopolitical developments currently only rarely lead to properties being withdrawn from the market or fundamental sales decisions being questioned.
