Extract from the interview:

When did you start working in financing?

Michael Keller: In 1979 I started my career in a bank, characterised by typewriters and interest rates of 12.5%. I became self-employed in 1991. Since 2003 I have been managing offices for Dr Klein, one of the leading online providers and global players in the field of property financing. My career shows the rapid development of the financial sector, from the era of typewriters to today's digitalisation.

How many properties have you financed in your life?

Michael Keller: Every year, we bring around 1,000 to 1,200 customers on board and not only cover traditional business. We also take care of special requirements, such as English-speaking customers or people with blue cards or temporary residence permits. We are happy to solve any challenges that are critical to your Google ranking.

What is the current property market like?

Achim Amann: You have known the property market since 1991 and many newcomers only know about 1% interest rates and constantly rising property prices. As estate agents, we were ridiculed when we spoke of average value increases of 3-5% instead of 10-15%. We are now experiencing market declines of minus 10 to minus 15% compared to the peak year at the end of 2020/beginning of 2021. You've seen cycles like this before.

Michael Keller: The current situation on the property market can be characterised as exciting. Under the motto "It's time for the brave!", the situation should be viewed boldly but realistically. The fact is that housing construction is not keeping pace with demand. In Berlin in particular, there is a continuing influx of new tenants and, at the same time, rising rents on a remarkable scale. Despite these factors, the current rise in interest rates is leading to a certain reluctance among potential buyers. Many people are unsure and wonder whether they can afford a property in this situation.

This uncertainty exists, but now is the time to look for a suitable property in peace. The basic housing situation, particularly in Berlin and the immediate neighbourhood, is unlikely to improve. There is a clear need for housing and it is obvious that politicians are currently unable to find a solution to this problem.

Are there things we can do to influence the market directly?

Achim Amann: We both work in the property business: you take care of the financing and I look for suitable sellers. What do you think we can improve in concrete terms?

Michael Keller: Firstly, both buyers and sellers need to adjust their expectations. Sellers can no longer expect 2021 prices, while buyers must be prepared to pay around 30-32% of their net income for interest and amortisation instead of the previous 20-22%. So both parties will have to make compromises.

Secondly, market knowledge is crucial. You need to understand the market and have the courage to take the next step with the right property.

Achim Amann:  Prices are falling, they say out there. Now I'm also hearing that prices are rising. You've already experienced a lot of market changes. What would you say?

Michael Keller: The current market situation is characterised by slightly falling prices, caused by temporarily higher supply and lower demand. However, I expect the trend to reverse in the next twelve months. The uncertainty that we still felt in January and February seems to be easing. This can be seen in the increased number of financing enquiries and concrete buying interest. An illustrative example: A customer called me on Sunday to say that he was in a bidding war for a condominium. He and three other interested parties wanted to buy the same flat, which emphasises the competitive pressure.

At the same time, I expect to see a new subsidy for residential construction in the near future, similar to that which already exists in Brandenburg. This will make it easier for young families with children in particular to buy property in Berlin.

We actually have a small bet on the development of interest rates.

Achim Amann: You are of the opinion that interest rates will fall again soon, whereas I believe that they will not fall in the short term.
Michael Keller: I firmly believe that interest rates will fall moderately in 2024. This view is based on current economic data, which shows weakness in the German economy. In order to revitalise this and in view of our export orientation, a weakening of the euro may be necessary. One way to achieve this could be through slight interest rate cuts. Even though I do not expect us to see the interest rates of 0.5% or 0.34% from 2021 again, I think it is likely that interest rates in the ten-year range will be below 3% in 2024.

Current status: The interest rates vary between 3.6% and 4.3%.

What does this mean for buyers and sellers?

Achim Amann: The interest rate trend has different consequences for buyers and sellers.

Buyers: When interest rates fall, property prices tend to rise again. A common misconception we often hear as estate agents is the idea that you have to wait until prices or interest rates fall before buying. In that linked YouTube video this topic will be explored in greater depth. It is important to recognise the trend. If interest rates fall next year, a rapid rise in prices is to be expected.

Sellers: A falling interest rate could be the ideal time to realise higher prices for properties, as demand is likely to increase.

On the current situation: The main reason for the price decline in the last 12 to 18 months was the rapid rise in interest rates from below 1% to around 4%. We are currently experiencing a rebounding market. As of today, 23 August, we have more enquiries than ever before, up to 500 per week. What is particularly remarkable is that the enquiries are now mainly coming from buyers with good credit ratings, who were previously rather hesitant and were watching the market closely.