How To Buy Real Estate Despite High Prices

How to buy real estate despite high prices in order to have a great investment? We compiled a list of 3 steps on how you can buy any property in Germany you like (within your financial capacity).

Key Takeaways

  • The three steps to invest are: Spend less money, start saving and investing money, and start on your real estate investing journey!
  • The big question that everybody asks when you’re ready to get started is – is now the right time for investing in real estate?
  • We think 2023 is still a good time to buy a property. It’s a simple case of supply and demand that we face in the German market!

How To Buy Real Estate Despite High Prices

Real estate prices in Germany went to the moon in the last few years! 

  • 7,3% property price increase after inflation in 2018
  • 9,3% property price increase after inflation in 2019
  • 9,6% property price increase after inflation in 2020
  • 14,2% property price increase after inflation in 2021

That is more than 40% in the last four years

So the question is, should you invest in real estate in Germany right now, and if so, how do you do it because properties are getting more and more expensive? These are good questions that we will try to answer in this article on the GermanReal.Estate Blog.

If you want to buy a property here in Germany, regardless of the price, location, or type of property, there are always three things you need to do. These steps build on each other, so you cannot skip the first two steps and start buying a property immediately. 

As we mentioned in a recent article, it is not possible to buy a property in Germany with a bad financial situation. If that’s what you’re expecting, rather go and watch one of the fake Internet gurus selling overpriced courses that promise you’ll get rich with real estate regardless of your financial situation.

+7,2% Property Prices in 2018
+9,3% Property Prices in 2019
+9,6% Property Prices in 2020
+14,2% Property Prices in 2021

Three Steps To Investing In Real Estate – Don’t Skip Any

Step 1: Live Below Your Means

We believe every property purchase starts with you living below your means and saving money. It isn’t exciting, but that’s the reality. If you want to borrow hundreds of thousands of Euros from a bank to invest in real estate, you need to show them that you have a decent financial situation.

Step 2: Start Saving & Investing

If you live below your means, savings should start to accumulate slowly but steadily. To make the savings part as exciting and efficient as possible, you might want to get a bank account that actually pays you some interest

Over on the PerFinEx website, we have some calculators that show you bank accounts with a little over 2% interest, plus you could get a 50€ bonus on your new account if you open it through the website. Flexible savings accounts are currently paying up to 2.2% interest, while fixed-term savings accounts are paying up to 4.5% interest. Hopefully, that makes the savings part a little more exciting for you. 

Alternatively, if you think real estate is an exciting investment type, which is likely since you clicked on this blog article, you do have some options! For example, you can invest in our Real Estate Security Tokens while building capital to buy a property. Our property development tokens usually have a short run time of just two years and give you both a nice interest rate and profit share.  

At the time of publishing this blog, we are getting ready to release our 8th token. Depending on when you read this, it may still be online, or we may have even more projects available. Our 8th token is going to have a fixed 12% interest rate. You can get more information and invest in our Real Estate Security Tokens on our website GermanReal.Estate.

Step 3: Buy The Property

Moving on to Step 3, the idea is to use the capital you have saved to buy a property. Before doing so, it is necessary to ask the all-important question:

You can invest in our Real Estate Security Tokens while building capital to buy a property. Our property development tokens usually have a short run time and give you both a nice interest rate and profit share

Is Now The Right Time To Buy A Property?

The clear and definitive answer to this question is … it depends. We’re not giving this answer to make fun of you! It really does depend. It depends on what you expect from your real estate investment. The 10 years before 2022 were the Golden Age of real estate. You saw the growth rates we cited at the beginning of this article. 

We had these insane property price increases for three reasons.

Reason 1:

The German population is at an all-time high of 83 million people right now, the highest in German history. Over the last more than 10 years, around 300.000 to 400.000 people migrated to Germany. This is net migration, after deducting people that moved out of Germany! 

In 2015, which was a big year, more than one million people migrated to Germany. It happened again in 2022. We don’t have the final numbers for 2022 yet, but it is estimated that more than one million people migrated to Germany from Ukraine alone. The German population will continue to increase, not just from Ukraine where some people expect 1.4 million this year, but from other countries as well.

Reason 2:

Reason two is that the German economy, and with it the salaries, have been growing continuously. In this graph, you can see that the German economy has been growing by 1% per year over the last 10 years, this might sound low, but that’s after inflation.

Here you can see that gross salaries in Germany have been rising by about 3% – 5% per year over the last more than 10 years. So there was a lot of money in people’s pockets over the last 10 years, and not a lot to do with it because interest rates have been at zero for many years.

Reason 3:

Only in 2022, interest rates have started to rise again after falling constantly since the early 90s. Despite this, interest rates are by no means high, as some people are claiming. 8% is high, and 10% is high, but the current rates of 3% to 4% that we have right now can be considered quite normal.

Because of these three reasons, real estate prices in Germany have increased so much, and they could have increased even more.

Why It Is Still A Good Time To Invest In Real Estate Right Now?

The last point to make here is that it is still a good time to invest in real estate in 2023. This isn’t just hype for the internet, it is something we truly believe at GermanReal.Estate. In fact, we just recently purchased a property in Düsseldorf for all of us to invest in together as a community. We purchased the property in Düsseldorf, one of the top seven cities in Germany, with a special purpose entity and then tokenized it. Now everyone can buy small fractions of it and invest together with us.

An important reason why it is still a good time to invest in real estate in Germany, despite interest rates in 2022 and 2023 starting to rise, is simply supply and demand. The German government wants 400.000 new Flats every year to satisfy demand for living space and normalize rents. This high demand is also why property prices have exploded in Germany over the last few years. 

The issue is that we are far from reaching 400.000 new flats every year. In fact, a total construction of 300.000 new flats has been achieved only once in the last 20 years. The average of the last 20 years is 243.000 per year, meaning that 157.000 are missing every year. That is, 3.14 million flats missing over the last 20 years, as depicted in this chart.

Now you know the three steps to buy any property you like and if it’s a good time to buy a property right now. If you want to start investing in real estate in Germany right away and in the easiest way possible, check out the properties currently available on our GermanReal.Estate Marketplace.

2 thoughts on “How To Buy Real Estate Despite High Prices”

  1. Pingback: Wie Man Trotz Hoher Preise Immobilien Kauft | GermanReal.Estate

  2. Pingback: How To Get Rich With Real Estate (in Germany) | GermanReal.Estate

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