One of the problems of 2021 is that money printers went brrrr with such intensity that some people are losing faith in future purchasing power of their local currencies and stick any free money into bricks and mortar.
Also, where I live, the official inflation is now like 4 per cent, but gosh, so many things are massively more expensive than before (food in restaurants maybe 40 per cent, some construction material even 100 per cent more expensive than before), that it makes people distrustful of official figures.
Just like cars depreciating eliminated privately owned car rentals.
Oh, wait, no it didn't. Housing is the only thing miraculously protected from depreciation because making it depreciate would hurt chances at reelection.
I’d be really happy with communal non-private rental housing. Corporates already do a bad job, I don’t see why they should make massive money from limited land resources.
The only way for housing to keep rising at its current speeds is for buyers to spend a greater share of income on housing and for interest rates to fall.
Interest rates are near zero and individuals are spending very large portions of their income on housing. Continued expectations for high returns on housing will lead to hard landings/defaults or pathological cases where renters don’t pay rent and can’t be evicted.
This is based on assumption that average property user income will not rise and that the possible profits are almost maximized. Berlin is growing fast, creating lots of new jobs, often well-paid ones (above national average) filled by immigration, so demand is growing faster than construction of new apartments. And prices are still below Munich or other big cities. That said, this is an indicator of liquidity showing that property is indeed a secure and reliable asset, but this is not the reason for investment by city.
Many people’s view points are influenced heavily by the 2008 financial crisis, which was a exceptionally rare and historic event. Demand for housing was artificially inflated due to fraud. Do you think demand is being inflated now? If so, by what, and what would cause demand to shift back?
One possible answer is interest rates being low. However, the trend in interest rates towards 0 / negative has been going on for over 100 years. I don’t see them going up significantly ever again.