Germany’s estate agents plan strike action

First it was the pilots, then train drivers - now Germany's real estate agents are threatening to go on strike. But their call to arms has been met with sneers rather than sympathy.

Germany's estate agents plan strike action
Photo: DPA

If it goes ahead, the strike is unlikely to bring the country to a standstill in the way train drivers and pilots have managed.

Indeed estate agents' poor reputations for getting commission for simply for showing you around a property has led many to welcome the move.

Estate agents themselves are also leaning in favour of industrial action on Friday November 7th, in response to a new property law which will stop them getting commission from tenants and cap rents. 

Helge Norbert Ziegler,  president of the German Federation of the Estate Agents (BVFI), said its 11,000 members were largely in favour of action, according to an online vote on their website. "The trend is towards a strike," Ziegler said. 

Estate agents have until the end of Friday to vote.

The BVFI is upset that from 2015 their members will no longer be able to charge commission on rented properties.

At the moment many properties are rented out with a commission of two months rent plus sales tax, paid for by tenants. In the future, the estate agents' fees should be covered by landlords rather than tenants. 

The BFVI says that this puts estate agents' jobs and businesses at risk. "We don't want to be seen as the country's morons anymore and be blamed for rent increases, they are a failure of politicians," Ziegler told the ddeutsche Zeitung.

But some estate agents are against the move. "It's a stupid idea," said Markus Gruhn, president of a group of Berlin and Brandenburg estate agents. "I'm sure politicians are trembling in their boots over the economy collapsing because of an estate agent strike."

The hashtag #maklerstreik (estate agent strike) has also taken off on Twitter.

"Please strike forever," one tweet read. "They'll have more work on by striking," another wrote. "Imagine a strike which just makes everyone laugh," another person tweeted. 

German cities, particularly Berlin, Munich and Frankfurt have seen large rent increases in recent years. 

As part of the law shifting the burden of estate agents' fees to landlords rather than tenants, rents could also be capped in some areas.

Landlords will be barred from raising them by more than ten percent above the local average for new tenants.   

SEE ALSO: Cabinet agrees cap on rent rises

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Why house prices in Munich are starting to fall

The real estate market in the southern German state of Bavaria is changing due to the precarious economic situation, a new report has found.

Why house prices in Munich are starting to fall

What’s happening?

Germany’s largest state – Bavaria – is known for many positive things, such as stunning nature, culture and festivals. But it also has a reputation for being an expensive place to live. Many cities, especially Munich, are notorious for having some of the highest rental and property costs in the country. 

But it looks like the trend of rising house prices is beginning to dampen. 

According to the latest report by the Real Estate Association Germany South Region (IVD Süd e.V.), inflation and increased mortgage interest rates have put an end to the period of significant hikes in the Bavarian real estate market – at least for the time being. 

“The rapidly growing financing costs and the uncertainties associated with the impending recession in Germany as a result of the Ukraine war are inhibiting the dynamics of market activity and, in particular, the price dynamics in the residential real estate market,” said Professor Stephan Kippes, head of the IVD market research institute.

It reflects a general trend that we’ve been starting to see in Germany as the tough economic situation bites. 

According to a recent study by property search portal ImmoScout24, the number of people buying houses in Germany fell dramatically in the second quarter of 2022. And In many of the major metropoles, property prices also went down as people struggled to find interested buyers.

READ ALSO: How property prices are dropping in major German cities 

Where can we see this trend?

The price changes can be seen clearly in the state capital Munich, reported regional broadcaster BR24.

According to the study, the average property price, which was €9,500 per square metre in spring, has now dropped to €9,450. 

In some Bavarian cities, the trend reversal is not yet as noticeable. In Nuremberg, for example, property prices are still rising but at a slower rate than previously seen. The price of a property in spring was on average €3,630 per square metre, and is now €3,710, according to the study. 

Experts say it shows how the situation is developing. 

“The state capital of Munich, where the first price declines for residential real estate were identified in the fall of 2022 for the first time in a long time, could serve as a seismograph for future developments in Bavaria’s large and medium-sized cities,” said Kippes. 

Homes in Erfurt, Thuringia.

Homes in Erfurt, Thuringia. Photo: picture alliance/dpa | Martin Schutt

Interest increases for buyers

At first glance, this development could seem tempting for those looking to buy property in Germany.

But Kippes points out that buyers are hardly benefitting from the decreasing prices – because interest rates have risen. 

“A few months ago, you could get an interest rate of 0.8 percent,” said Kippes. “If we take a purchase price of €500,000, let’s assume that €150,000 is equity and a €350,000 loan is needed; two percent repayment, 10 years fixed interest rate. Then, you would have paid €817, but today it would cost you €1,473.”

The IVD study said that the historically low-interest rate level of the past years in Germany “made it possible to compensate, at least partially, for the massive increases in purchase prices in many places”.

READ ALSO: The rules foreigners need to know when buying property in Germany 

“Now that the relief provided by low-interest rates has largely disappeared, but at the same time purchase prices have remained at dizzying heights, owner-occupiers in particular, who traditionally often finance with a high proportion of borrowed capital, are increasingly dropping out as buyers,” said the study.