German bank Deutsche Hypo reported delays in real estate transactions and expects prices to fall soon

German bank Deutsche Hypo reported delays in real estate transactions and expects prices to fall soon

German mortgage bank Deutsche Hypo has joined the already long list of European organizations that note the deterioration of the situation in the real estate market of the continent. According to the bank, there is a high level of caution among participants in the real estate market, many operations are paralyzed or take an extremely long time, prices are falling. The latest Deutsche Hypo report indicates that in the third quarter, the indicators of European markets are beginning to weaken, including the Reecox index.

The Reecox index collects information for quarterly publications on the state of the real estate markets in Germany, France, Great Britain, Poland, Spain and the Netherlands. The result of the survey is calculated for each country according to five variables. For Spain , such variables are the following:

  • Ibex Index 35;
  • FTSE EPRA NAREIT Spain Real Estate Index;
  • The European Commission's Economic Sentiment Indicator;
  • ECB interest rate;
  • Interest rate on 10-year bonds.

Based on the processed data, the European index declined by 7% over the summer and has been in the red for four consecutive quarters. The report says: «After relatively moderate falls in July and August 2022, by 0.7% and 1.5%, respectively, the downward trend has gained momentum significantly. In September, the indicator decreased by 4.9%, reaching 213 points — a level not seen since July 2020». Thus, the pan-European index reached a two-year low.

The report adds: «The emerging downturn reflects the continuing uncertainty that European real estate markets continue to face due to the current economic and international situation. Indecision is reflected in the markets. All European countries have suffered from a strong drop in stock and real estate indices, as well as economic indicators».

Separately, it is worth noting Germany, which turned out to be the only country in question where there was a double-digit decline in the Reecox index. It fell by 10.3% to 258.9 points. In the UK, it fell by 6.4% (to 189.5 points). In Poland and the Netherlands, there was a decrease of 4.3% (to 175.1 points) and 4.7% (to 175.8 points), respectively. France and Spain showed the best in this anti-rating. The first decreased by only 2.6% (to 219.3 points), and the second by 2.9% (to 172.9 points).

However, the director of the Madrid branch of Deutsche Hypo assures that real estate in the field of logistics and housing is still in extremely high demand among investors. Slightly worse, but at a similar level, office sales are showing themselves. However, he admits that despite the improvement in the situation in the hotel market after the severe consequences of the pandemic, this sector will need enough time to recover the losses of recent years.

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