Listed real estate fintech Hypoport shocked the market when weak demand for its services led to it suspending its annual targets. It said its current forecast for the year would be 'significantly missed', and it could no longer predict whether the current consumer restraint in private real estate financing might yet recover this year. The share price, which had been in steep decline already this year, crashed by a further nearly 50% on the announcement.
Despite a significant increase in property supply and slight price falls, consumers in Hypoport's main market, residential mortgage finance, were holding back on transactions because of a combination of soaring interest rates, extreme inflation and fears of recession, as well as hopes of sharper falls in house prices, it said.
The second half of the year has so far shown very weak demand, said Hypoport. For the third quarter, on a preliminary basis, turnover is expected to be slightly below the previous year's level and earnings before interest and taxes are expected to break even.
The SDAX-listed Hypoport, through its various subsidiaries including finance broker chain Dr. Klein and matching platform Europace, is the largest broker platform for private mortgage loans, savings products and instalment loans in Germany. Its largest competitor is Interhyp, part of Dutch group ING.
Surprisingly, as recently as the beginning of August, Hypoport had stuck to its annual targets despite the sharp rise in interest rates on real estate loans and had forecast revenue of €500 million to €540 million and operating earnings (EBIT) of €51 million to €58 million for 2022.
Presenting Hypopart's half-year figures in August, CEO Ronald Slabke had described the residential mortgage market as robust, spoken of a record first half and stressed that a large proportion of the annual targets had already been achieved.
Several German analysts who follow Hypoport reversed their general benevolence towards the stock and downgraded the stock to 'SELL'. About a year ago the stock was trading at over €600, and has lost about 85% of its value since then.
The sharp rise in interest rates is currently causing a trend reversal in the German real estate market. "We are seeing a shift in demand from buying to renting," said Thomas Schroeter, managing director of Immoscout24, recently. As data from the online portal shows, demand for buy-to-let properties slumped by 36% year-on-year in the second quarter of 2022. As a result, the number of offers for apartments and houses rose by 46%, and listings also remained online longer than in the previous year, as it becomes more difficult for sellers to find buyers.
Despite this, the latest figures from Destatis, the Federal Statistics Office, show that prices for residential real estate still rose by an average of 10.2% in the second quarter compared to the same quarter of last year. However, the increase had weakened for the third quarter in a row: at the beginning of the year it had still been 11.6%, at the end of 2021 12.6% and in summer 2021 12.8% prcent. Apartment and detached and semi-detached houses also rose in price compared to the previous quarter, by an average of 2.5%.
"The largest price increase was in the sparsely populated rural districts," the statisticians said. Here, prices for detached and semi-detached houses rose by 13.6% compared to the same quarter last year, and condominiums by 11.7%. In the Big 7 cities, prices for detached and semi-detached houses rose by 12.2% and for condominiums by 10.6%.
