Real Estate Interview: Strategies in the Crisis and the Collapse of an Area in Lower Rhine

Fewer and fewer people can afford to buy their own home. For many people, rising loan interest rates and high construction costs are destroying the dream of owning their own four walls. Guido Lohmann, CEO of Volksbank Niederrhein, has been observing the development for years. Matthias Alfringhaus (NRZ) asked him for an assessment.

How has the demand for building loans on the left Lower Rhine developed this year?

Guido Lohmann: The demand for construction loans weakened significantly, particularly in the winter of 2022 and the first half of 2023. Since around May of this year, however, we have felt demand increasing again in our business area, so I believe that by the end of the year we could definitely be back at the level before the Corona crisis. However, these are almost exclusively existing properties. The new building has almost completely come to a standstill.

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Why has demand fallen after the boom of recent years?

Never before in the last fifty years have interest rates been raised as quickly and as sharply as they are now. This means that interest rates of well over four percent are now charged on the banking market for a ten-year interest rate. In plain language, this means that to finance a purchase price of, for example, 300,000 euros for an apartment or a house, you now have to pay 750 euros more per month than just a few months ago.

This simply overwhelms a lot of people interested in building and buying, especially young families – especially given that the rise in inflation in recent months is already putting a lot of strain on people’s household budgets. In addition, there are significantly increased construction costs in the new construction sector, as a result of which it is hardly possible to build a new house with land for less than half a million euros. And then there is also the 6.5 percent real estate transfer tax in North Rhine-Westphalia, unfortunately one of the highest rates nationwide, which doesn’t exactly encourage building or buying.

The annoying confusion surrounding the heating law is particularly annoying and difficult to understand for property owners as well as for those interested in building and buying. Unfortunately, this whole chaos left people very irritated and unsettled, and this was coupled with a more than confusing funding landscape, which was then cut off by the federal government almost overnight last year.

Is waiting the right strategy now?

In my opinion, anyone who can manage it financially should take advantage of the current market situation and seriously consider buying a property right now. The rise in interest rates and people’s uncertainty have led to a slight decline in the high purchase prices of recent years. Prices haven’t fallen much, but they have calmed down a bit. You can act better now than in the heated times two or three years ago.

Are there any signs that the situation is changing in favor of those interested in real estate?

I expect that real estate prices will remain stable and could even rise again soon. The reason lies in the absolutely inadequate creation of new housing. The federal government has spoken of 400,000 new apartments per year, I think there will hardly be 200,000 next year. However, with ever-increasing demand for living space, this will inevitably lead to rising prices again.

How has Volksbank Niederrhein adapted to the changed conditions?

Of course, we cannot influence the fundamental market changes. However, we built up a stable network of external cooperation partners for construction financing years ago. A fairly new field is our “VBN Wohnen Leben” offer, which is aimed specifically at property owners from the 60+ generation. The aim here is to be able to easily carry out ecologically sensible renovations by placing a moderate burden on your own property, without having to give up your own financial independence.

More articles from this category can be found here: Moers and the surrounding area