The number of mortgage sales in Germany has been declining for years, even during a pandemic. However, for a number of reasons, experts expect this trend to end soon.
- FEBRUARY 22, 2021
The number of collateral facilities in Germany decreased during the pandemic. According to a study by the specialized publishing house Argetra, last year proceedings were initiated on 14,853 real estate objects with a total market value of 3.1 billion euros. For comparison, in 2019 there were 17,600 houses, apartments or land plots with a market value of more than 3.4 billion euros.
Argetra experts write in the report that the constant low interest rates, bank loans and cash benefits from the state were able to prevent numerous bankruptcies during the pandemic. In 2020, an average of 36 out of 100,000 households were affected by the seizure of property (42 in the previous year). With the expiration of state aid, rising unemployment, the number of bankruptcies may increase.
The assessment is based on appeals in all almost 500 German courts. According to the information, these are mainly residential buildings (66 percent), the lion's share of which are houses for one and two families, followed by condominiums. The remaining part (34 percent) falls on commercial real estate, commercial buildings, land and other real estate. However, only about half of open cases end with the sale of property at a court hearing. The remaining arrested houses, apartments or land will be sold without waiting for a trial - there are enough buyers in the real estate market.
The number of collateral in Germany has been falling for many years. The reasons are the long-term good economic situation and low interest rates, which keep the interest burden on loans to debtors low and stimulate demand for real estate.
"Over the past ten years, the economy has grown steadily, the number of social security workers has continued to reach new heights, and real wages have risen steadily," said Kai Warneke, president of the Association of Homeowners and Landowners. Therefore, it is not surprising that the number of bankruptcies has been steadily declining. But economic development suddenly stopped due to the COVID-19 pandemic.
"During the crisis, banks offered borrowers deferred payments instead of canceling loan agreements and initiating forced sales," said Walter Ruche, managing director of Argetra. "Many court dates have been canceled due to a ban on meetings during a pandemic. Due to the economic downturn and rising unemployment, especially in the automotive industry, a much higher number of bankruptcies can be expected again. We do not expect to stop issuing loans due to coronavirus until the second half of 2021 or even until 2022, as the processing time in banks and courts is very long.
Last year, according to Argetra, a property with a market value of 212,000 euros was sold at auction, up from 195,000 euros the previous year. The highest values were in Hamburg and Berlin, and the lowest in Saxony-Anhalt. The appraised value of a property often deviates from the current market value, as it is often one or two years before the date of the foreclosure auction, and prices meanwhile rise or fall.
A particularly large amount of real estate will be sold at auction in central Germany from North Rhine-Westphalia to East Germany. The number of planned foreclosure auctions per 100,000 households in Saxony-Anhalt (73) is still three times higher than in Bavaria (22). Chemnitz is ahead of the 40 cities with the largest number of upcoming hearings, followed by Leipzig, Zwickau and Berlin.
Source: Verizon Media