Abstract

The German residential real estate market has thrived in recent decades, driven by low-interest rates, demand and supply factors. However, concerns arise about the impact of changing interest rates. This paper explores the nature of interest rate risk and its effects on the German real estate market. Interest rate risk, affecting instruments and portfolios, extends to residential real estate. Interest rate changes can affect mortgage costs, influencing demand and prices. It can alter interest rate risk can lead to immune to interest rate risk, as research suggests an 11% overvaluation. Understanding the interplay between interest rate risk and the German real estate market is vital for risk interest rate risk are key factors in its future. In conclusion, this paper underscores the intricate relationship between interest rate risk and the German residential real estate market, interest rates and demographic shifts. Such analyses will provide a more comprehensive understanding of how interest rate risk influences real estate pricing and market dynamics.

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