ImmobilienScout24 points to trend reversal in rising rents
Another company that has access to a huge database of residential transactions is Berlin-based ImmobilienScout24, the largest internet portal in Germany. The group has also been matchmaking lenders with mortgage seekers for a couple of years now, as well as being a must-visit site for millions looking for a new house or apartment to buy or rent.
ImmobilienScout24 produces the IMX Index monthly, using data based on the more than 11 million property offerings appearing on its web portal since 2004
The latest research from ImmobilienScout24 makes two significant claims. First, that the trend for steadily-rising rent levels of the past two years reached a turning point in July, with rents actually falling slightly in several large cities for the first time. Secondly, potential buyers are turning away from financing at any price, and are prepared to invest more of their own equity capital – a clear sign that investors are alert for the danger signals of market in danger of overheating.
On the rental front, the ImmobilienScout24 IMX Index showed offered rents in Hamburg, Munich, Cologne and Frankfurt dropping by 0.9%, 0.5%, 0.2% and 0.2% respectively in July, for the first time in over a year. Only in Berlin among the largest cities did rents continue to rise (by 0.5%), but this is due to the initial low base and the demand by foreigners among others for a place in the capital, say the researchers.
The ImmobilienScout figures confirm other research which shows the overall purchase price level still continuing to rise, albeit slowing. Existing apartments nationwide rose by 0.7%, while Munich prices rose by a further 1.5% in July. Given the economic problems in many weaker European nations, say the IMX researchers, inward migration to Germany could lead to further demand for housing while rents actually continue to slide.
Further research produced by ImmobilienScout based on an analysis of 26,000 loan applications up to end-June in Germany’s five largest cities show that buyers are stumping up more equity, and that loan offers are less generous than they have been in the recent past, a signal for a tightening market in finance.
Ralf Weitz, head of mortgage finance at ImmobilienScout, commented: “For the first time since mid-2011 we’re seeing a reversal in the willingness of borrowers to take on more debt, and this looks like a clear trend reversal. In our view, interested borrowers have adapted to what’s happening on the market and are becoming a lot more realistic in what they want to get financed.”
For the first half of 2013 the level of equity roses strongly in the larger cities (compared to 2012), with Munich rising from 14% to 20% on average, Hamburg from 10% to 14%, and Frankfurt from 9% to 10%. Measured as a multiple of monthly income, borrowers are clearly becoming more cautious. While the average multiple of monthly income to borrowings nationwide is 64 – itself well down on the level of six months ago - Frankfurt saw the level of loan finance offered fall from 73 times monthly income to 59 times, in Hamburg it fell from 70 times to 66 times the monthly multiple. Only in Berlin was there a rise, with borrowers taking on a loan of 61 months’ income, up from 57 times.