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A Reuters poll forecasts a 3% annual increase in German housing prices through 2028, driven by tight supply and sustained demand. This trend threatens affordability for first-time buyers, particularly in major cities like Berlin and Munich. The survey of 50 economists and analysts highlights structural challenges in the German real estate market, including limited construction activity and demographic shifts. Rising home prices could also impact broader economic growth by reducing consumer spending on other sectors. For markets, the sustained price growth may benefit real estate investment trusts (REITs) and construction material suppliers. However, affordability pressures could dampen housing-related consumption, affecting sectors like furniture and home appliances. Traders should monitor German housing data and policy responses, such as subsidies or zoning reforms, which could influence market sentiment. Investors in the Gulf and MENA region with exposure to European real estate should assess the long-term viability of their portfolios. The 3% annual increase implies a 15-20% cumulative rise by 2028, which may outpace income growth for many households. Key indicators to watch include Germany’s housing affordability index and construction permits data in the coming quarters.
