German Mortgage Market overview

How COVID-19 might affect Germany’s property market

Times are becoming weirder and weirder, and change is coming fast. Germany is now on the top 10 countries affected by the COVID-19 pandemic, and new preventive measures are being placed by the German government to try and control the contagion curve of coronavirus. An economical backlash is imminent – but what will be the effects on Germany’s property market?


Economical Growth in Germany

Overall, the German economy had already started to slow down in the last quarter of 2019, when the first effects of the coronavirus outbreak in China became visible. From October to December, the economic growth was, indeed, zero, according to the German Federal Statistics Office. One of the possible reasons? China holds important customers and suppliers for German companies, especially in the vehicle industry.  


Now that only restaurants, supermarkets, and pharmacies remain open – and the borders, closed – we can expect to see a more negative effect in general, which economists hope to rebound the economy back to normal in the second half of 2020. 


COVID-19 and the German property market

The property market is, of course, much different than the stock market, and will feel the effects of the coronavirus outbreak at a much slower pace. The worst-case scenario at the moment is that building sites will be shut down as part of the emergency measures in the hope of containing the virus more quickly – and that could last for up to 3 months. 


So in that sense, the news is not so positive for buyers who had invested in a newly-built flat as they might be delayed. But on the other hand – honestly, even in Germany, do companies ever deliver the flats at the promised time?

Research so far shows that prospective home buyers don’t feel discouraged by the COVID-19 outbreak, according to the UK lettings and sales agent Benham and Reeves. 83% of home buyers and sellers still wish to purchase a new home in 2020.


The Mietendeckel – or Berlin Rent Act, in English – seems to have a much more immediate effect on the German property market. Of course that a recession would impact the value of properties on the market, but housing is still considered a long-term investment that shouldn’t be postponed due to short-term emergencies. The overall pay-off is still greater than the risks.

The Advantage: Lower Interest Rates

With the economy under such a threat, it’s quite likely that banks will lower their interest rates and taxes to create more financial opportunities and a fiscal boost – in fact, the UK has already done so and other European countries are likely to follow. 


If you are a prospective property buyer with a secure job and steady income, it might be a good idea to take advantage of this short term momentum and find your dream home in Germany. If the COVID-19 follows the path of past outbreaks, it will hopefully be contained by the first half of 2020, and we could anticipate a possible rebound in markets from August on.


One Thing To Watch Out: Border Closures

The most realistic of negative outcomes in these times of COVID-19 outbreak are the border closures around Europe, Germany included. At the time of writing, Germany has border control with Austria, Denmark, France, Luxembourg and Switzerland, and it remains unclear if airports will stay open for much longer. Please bear that in mind if you are planning to visit your future investment in the near future.


Whilst plans are put on hold, enjoy this time to consider your loan options and get documents in order for your future property investment in Germany. LoanLink can help you with that! We are a mortgage broker based in Berlin focussing our consulting Expats/ foreign investors on their property purchase in Germany. 

Got a question about the real estate valuation or home purchase process for non-German residents in Germany? Contact us!

You may email us at or by phone +49 (0) 30 5683 7535. You can also start with the LoanLink mortgage illustrator here:

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