Our theory: The fear of inflation critical for the precautionary demand for real estate-based and price effects and not the actual inflation. In the last 15 years had no more fear - and the prices of real estate fell asleep, while in all industrialized nations at the price front was drummed. The guards of New Urangst alone proves the Summer Theater, which last year by the energy-cost increases with inflation effect was made.
The camp of economists is divided. Some promise a high probability of an inflation. The others are afraid of deflation. Hardly inflation risks, the former chief Feri Rainer Rau or the economist at the German Hypo, Günter Vornholz. The much greater risk of deflation was the result of their dramatic economic consequences. Just this week, for the first time in 22 years reported a price decline. But deflation is generally at the moment rather unlikely, since the core inflation rate both in USA and in Germany have significantly positive. The current increase in the money supply play no role, since they decreased in velocity and discontinuous process of money creation setting. As soon as the economy pick up again, they could be higher interest rates by central banks the money very quickly out of the economic cycle take out. Rainer Rau who adds that, in modern economies are exclusively kosteninduziert inflations. The monetary expansion leads to inflation.
The opposite side, where we - an abridged version of the article is already in the current Platow specialty that is still in Platow 069th .. Freestuff - we could be classified, on the other hand, sees serious inflation risks. An early increase in interest rates will rise at the start not politically feasible. In countries with a real estate bubble, such as USA, England, Ireland, Spain or even keep an interest rate rise to significant damage to the house private peasant with high debts, the property value. This in turn should lead to a significant write-in banks and cause political unrest enter.
Then there is the competition between the economies of smaller pie, which is due to distribution, despite all the globalization will lead to a situation that nobody competitive disadvantage by strong interest rate rises will make. Large parts of the world's economic programs are only significant delay in one, and even incipient recovery effectively. That pushes. At the same time is likely during the next two years the national debt to rise strongly.
Even when the potential limits of a possible national debt has not yet been attained, but it is a debt on the best possible inflation and a significant increase in interest rates would also make a significant state budget. While almost all economists expect the situation will remain manageable in principle, ie the economic crash risk for this session is banned, but that a controlled inflation of politics, and many banks in the purchase will be taken. And to what extent inflation remains manageable when they are first of all permits, is not safe to answer.
Against the background immobilienwirtschaftlichem win the old-Rohmert / "The Platow Brief theses new significance. If there is inflation, there is a decent investment in real estate (funds) rather than in nominal assets. If there is no inflation, but nothing speaks against a decent real estate investment.
A private man builds his retirement is still safe on the land than on the savings or pension. A property for living resources now, and a rented property for the costs, protects against poverty in old age and ensuring a decent life even with low incomes. Especially in old age is the preservation of the housing picture is important.
The main thesis is that only the fear of inflation critical for the real estate investment is not the actual inflation. For all statistics, especially for investigations inflation leads to absurd results, which we last Platow Special and in "The Real Estate Letter" extensively represented, there is a serious indication of our thesis - the development of the past 15 years. Since the late'80s, there was no fear of inflation in Germany. This accounted for a significant purchase motive. The remaining inflation from 1.5 to 2% went to the prices totally gone.
A first conclusion: As long as there is no fear of inflation is, the property is not protected against inflation. Then play with other aspects of pricing play a role. However, once inflation is externally who are afraid, as is currently the case, or re-created, because important psychological threshold, such as about 3% are exceeded, this leads to price inflation anxiety effects in private real estate investments either in direct investment and indirect property investments.
It is therefore in our future assessment completely indifferent to whether inflation or not. Inflation fear is there. It will also be reserved for some years. Only a genuine deflation, which culminate in a depression, would cover over this fear. The core inflation rate is still positive and the people felt. The balancing effects go largely to the psychology over. The fear of missing the oil price and also effectively reduced energy costs pushing even more consumption. The scrapping proves that money is still available in households, where it is rather not expected.
Another development, however, speaks for inflation fear of the population. Although there is in countries bordering the Mediterranean are now lots of villas and elegant apartments near the sea to buy, but to ordinary homes to life, for example, has not changed in Milan. While the marketing period is extended, however, defines the demand rise. In Germany it is, but still without statistical relevance, the same development costs. There is an escape into the concrete gold. Currently, the benefit owner-occupiers property. We also hear that a relatively large number of sell orders in the housing crisis before background withdrawn. Why should a decent, functioning property with fair market rental, the second site today, only 7% as he or even 9%, he could sell if it is with "3" before the comma can be financed. Then it wipes out even after the administration itself.
At the current sale or purchase decision, it does not matter whether in the past 15 years, the expectations for performance and rents have risen. These are however not entirely clear. As we will detail which, in Germany in the past 15 years, the property in any way protected against inflation (see BulwienGesa / Bundesbank Chart). Meanwhile, the media and the audience understood. We have been asked why in the fund prospectuses still unpunished inflation protection may be propagated. Commercial real estate since the turning point in 1993 by 20% crashed.
Only in selected locations, it actually increases in value given. On average, it looked rather listless from. The BulwienGesa since 1975 identified housing index, prices for the residential density is initially significantly since 1993 and has crashed after a short rest at a lower level stabilized. In the private sector has still done nothing. Only the portfolio deals of recent years sent the housing index is a little upward. As a result, residential property in any way protected against inflation. In an environment in which even in almost all mature economies, the prices of residential real estate since 1993 are doubled or even quadrupled, the Germans succeeded in not only the nominal prices to hold. Looking for classical real estate investment houses or interest outside of the top sites, so now the total nominal rents by 10% below the rents for the year 1993 lie. The multiplier is also easy to perhaps one or one and a half years rents decreased. With high interest rates then have to distinguish between losses and maintenance of course be taken into account. Often, objects that the 1993 still in good merchantable were present outside of the market. There had to be invested intervening force.
So then the traditional know-how, private investment possible in the vicinity of his residence closer to work, for the Saarbruecker, Wuppertal, Kiel Chemnitzer citizens or to a grauslichen costing each with a nominal loss of slightly 25% since 1993 - without taking into account interim inflation!
Why disturb such a drastic destruction of property no one actually? Even with losses, the benefit of the property. At the end of the property and helps to pay for retirement. Who delivered at reasonable prices in the happier sites like Cologne or Munich has invested, even looks quite good. Even one's own house is now perhaps less valuable than it was then, but it is paid and you still live there. With the loss of value only beat around your heirs, but also remember him not because they're not as early as 1993, so calculated.
Also ask yourself why the development in the next 10 years should turn into positives. Already in 2001 we showed you on a "Decade of Residential" out. Since we do not meet the portfolio madness, but the investment of ordinary consumers thought can only conclude: wrong! Two harsh economic crash, two huge bonfires with the equity securities of the Germans and the awakening of a population afraid of our thoughts moved sideways. Our basic considerations from 2001 to a positive development of residential property are still valid. Remanence, technology effects, wealth effects, and much more Singularisierungseffekte can demand continues to rise.
Meanwhile, it is also clear how the two charts show that the alternative investment "share" at least in this millennium has not performed better. Twice money was burned. Some active investors in special tax depreciation funds, media funds, equities and money market paper in the Review has found that the inevitable risk reserve on the passbook was the best investment. Low interest rates make securities nor to the race. It does not matter that, from an economic viewpoint today with low inflation and low interest rates still higher real interest rates from 0 to 1% there, than at high interest rates and high inflation and high taxation. That is the psychology of investment. Sake of fairness, the practitioners, however, admit that a pensioner rate of 8% of its assets even at high inflation much better lives than 2.5%.
Excursus: Looking at the total duration of the DAX, the comparison with the property but still different (see both charts). Since the beginning of 1993 until the end of April the value of the Dax at least tripled, while commercial real estate indices are given in double digits and was living Buffeted force. For housing, however, distorts the portfolio a little boom of the plant.
Meanwhile it is also clear that this is confirmed by a recent study by the brand-German AG earlier studies and other research institutes that even for 15 to 20 years the number of households will increase. The fear comes in demography Housing premature. In today's rents, the apartment building even after. On the supply side, significant adjustments to. For nearly 10 years, the replacement demand is no longer covered by new construction. All this could also cost point of view to the recovery of housing investments lead. Wehmutstropfen there is a but. Despite the sideways movement of rents is the Mietbelastung of households in the sum of charges is not much less. Regular double-digit increases in charges to landlords often had to be shifted, because the stagnant incomes Mietbelastungsgrenze already been achieved.
An indication of the positive assessment of the housing market is the behavior of institutional investors. The market will benefit.
Why do many real estate stocks Investments still wrong? Whether the real estate limited liability companies, however, the board will remain questionable. These very often have very cheap housing, which in large quantities was available to invest, and must now find that the main cost driver is the area and not the rent is. The idea that it may be easier to make a hire from 5 euro to 5.75 euro a 15% increase as a rental from 20 euro to 23 euro proves to be fundamentally wrong. The tenants of the first price category simply have not the money, while tenants pay the 20 euros in the corresponding scarcity also easily could pay 23 euros. Added to that an increase in charges for instance, because of energy prices by 50 cents / sqm for the 20-euro-tenant almost imperceptibly, while the low-priced tenants, preferably with children and even larger area, in fact, is not in a position to This increase in charges to pay. It remains, in many cases, the landlords hang.
However, it is evident that the investment interest in housing is continuing to grow. Indirect investments will benefit because they can be professional management to offer promising locations, whereas for the individual investor but only an investment in the vicinity of his church tower remains.
What turns on once the interest in living, which over decades has been almost non-existent? Alternatively, inflation risks and investment considerations are the reasons. At the meeting of the Wealth Management team Platow the end of April, nearly all speakers at an engagement in real assets is recommended. Unisono was also in the Feri Platow meeting and the meeting the opinion that the prices of raw materials, particularly of oil would also not attract much time. Investments in commodities are, however, remains difficult. In principle, only derivative investments, derivatives and gold, which you can also physically reserved.
In the preferred recommendation, "hochrentierliche properties in prime locations to buy, of course, speaks first of all real estate ignorance from the economists. Hochrentierliche properties in prime locations should remain the exception. Nevertheless, even with decent real estate currently achieve a decent spread. The expectation of rising interest rates and rising inflation means that many economists now suggest a high level of indebtedness. In any case, slipping the current real estate investment back into the focus of investors.