Die rumliche Lage

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Ass.-Prof. Harald Standl, Ph.-D. Dept. of
Geography Bamberg University, Germany
Recent Development of Private Housing Markets and
its Consequences for Elderly Owners of Real
Estate in the Rural Periphery of
West-Germany An Example of a Shrinking Region in
Bavaria
4th International Congress on Population
Geography Honkong, July 11, 2007
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Changes in Population in Counties and Larger
Cities of the Federal Republic of Germany
1990 - 1998
1999 2020 (projected)
Steep decline Slight decline constant Slight
rise Steep rise
Steep decline Slight decline constant Slight
rise Steep rise
BBR Population Projection 2020
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BAVARIA
Prognosis of Population Development 2000 2020
(in )
-15 and less -14.9 till 10 -9.9 till 5 -4.9
till 0 0.1 till 5 5.1 till 10 10.1 till
15 more than 15
Regional disparities will grow between the
centre (around Munich) and the northern and
eastern periphery
MUNICH
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• Research Concept and Main Questions
• Results of interdisciplinary fieldworks (since
  2001)
• In the rural periphery of NE-Bavaria
• Detaillied spatial analysis on the level of
  municipalities

later demographic changes recent population
structures
amount of unoccupied flats / houses
changes in real estate markets

• Prognostic scenarios for the development of ...
• - population
• settlements
• private housing markets
• and
• economic consequences for elderly private owners

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Location of our study areas in
the Upper Franconia district
.
.
BAVARIA
Selb
Hohenberg

• Selb (17,000 inhabitants)
• Hohenberg (1,800 inhabitants)

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Part of an old industrialised and monostructured
region
In Selb, every second working-place in industry
got lost during the last decade

• Abandoned china factory of the ROSENTHAL company
  / Rainbowhouse

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Population development in the town of Selb (1978
2006)
Inhabitants
23000
22000
21000
20000
19000
18000
Jahr
17000
2006

• The decline in population is not a new phenomenon!

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Number of flats and of private households in the
town of Selb
year
Jahr
households
flats

• The gap between supply and demand is growing ?
  increase in the amount of abandoned flats /
• houses

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Spatial distribution of abandoned flats in the
urban districts of Selb (2002 Ø 9 )
City centre Multiple dwelling and multi purpose
units built before WW I
Kappel Distached houses, mainly built in the
1960s and 1970s
Vorwerk Multiple dwelling buildings Social
housing projects of the 1950s and 1960s
and more
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Coping the problem of abandoned flats and houses
in Selb
Demolition of surplus houses in Vorwerk area
(2001) in two public programmes Social
Town Urban Restructuring / West
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Situation after restructuring (2005) Costs
44,000 Euro
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Refurbished 50-year-old building (2005)
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Example of a demolished building in the towns
centre of Selb
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Hohenberg (2000) A deceptive idyll ...,
...
because 7 of all buildings / flats are empty
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Age of the head of a household (2001), compared
to the household size in Hohenberg
over 65 years 51 65 years 36 - 50 years 19
35 years

• Single- and 2-persons-households are clearly
  overaged
• In two out of three households the next
  generation (children) is missing, mainly due to
  migration processes

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Recent changes on the housing market
A) New building activties

• Despite of extremely low prices for development
  areas and very good conditions for construction
  financing, new buildings can hardly be found
• ? the costs for developing real estate become a
  financial trap for the municipalities
  (the point of break even
  will never reached)

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• End of the 1990s the administration of Hohenberg
  decided
• to develop a new building area (50 plots of
  land)
• in the meantime, only 15 of them could be sold
• The costs for developing lead to massive depts in
  
• the local budget !

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Recent changes on the housing market
B) Rented flats

• Due to high oversupply, flats in substandard
  quality cannot be rented out anymore
  
• ? Most of the older apartment houses are under
  pressure for refurbishment
• ? Because of constant low rental fees,
  the success of investments in such kind
  of objects is very uncertain
  (economically not profitable!)
• ? Competition between private and institutional
  owners (suppliers) grows

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The municpality of Hohenberg, as owner of several
apartment houses invested 1 million in
refurbishing recently, using public loans But
the rent fee (3.00 3.50 / sqm) is still very
low !
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Recent changes on the housing market
C) Multiple dwelling units (for sale)

• Are facing the most serious problems in
  marketing, due to highest surplus in offer and
  a most dramatic drop in prices
• Most objects (built before WW II, partly
  multi-purpose units, some of them old farmsteads)
  urgently need refurbishing
• Demand in this segment collapsed like in East
  Germany
• Most of the buyers are migrants, doing repairment
  as DIYer (with the help of friends and relatives)
  for own use
  (not as
  an investment, not for reselling or renting out).
• ? Prices start from 25.000

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This building in Hohenberg, sold by a bankrupt
china-factory, was bought 10 years ago by a
family of Turkish origin. It was in a desparate
situation, then ...
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But this heritage-protected, Old Forester-House
(1768) in the centre of Hohenberg stands empty
since 15 years
23
?
empty building
?
?
?
?

• ... And this is the situation in the centre of a
  neighouring town
• a real problem for urban development!

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Recent changes on the housing market
D) Detached Houses (for sale)

• Sellers have to be very flexible concering the
  prices only then, they are able to find a
  buyer
• Another pre-condition is that the building has to
  have general conveniences (no need for intensive
  refurbishing)
• The already low demand comes from young (German)
  families
• ? Well preseved buildings still can be sold for
  approx. 120,000 Euro (incl. the plot)
• ? But during the next 10-15 years, this
  situation will change dramatically, due
  to the fact that a lot of detached houses will
  be offered on the market (forced by illness,
  need of care, or death of the owners)

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Consequences for Elderly Oweners of Real Estate

• Until 2020, the cohorts born between 1930 and
  1940 will need intensive care (life cycle
  effect).
• This quantitative big generation was responsible
  for the German Economic Miracle after WW II and
  caused the baby-boom (with 2.5 kids in average)
  in the 1950s and early 1960s, as well.
• By hard work these people were also able to gain
  some prosperity and with the help of public
  funding they built small detached houses for
  their families.
• After the kids had grown up, most of them had to
  leave their home region, to find a job.
• Now the owners of the houses are retired and will
  stay in their property as long as possible
  (remaining effect).

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Consequences of elderly owners of real estate
What does the future bring?

• Private owners of real etate will not achive good
  market prices for their property anymore
• In need of intensive health care, they have to
  sell their houses for a quite low amount of money
• This sum will not cover the costs for a nursing
  home, if they have to stay there for a longer
  period
• Vulnerability is growing, although they did their
  very best to make savings by investing in their
  private houses
• This generation can be regarded as the main
  victim of economic decline in the shrinking
  region
• They will lose a big part of their savings, due
  to the (since many years) predictible breakdown
  of housing markets
• MANKIW WEILs Asset Meltdown-hypothesis
  (1989) still has some reliabilty!

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Thank you very much!
harald.standl_at_ggeo.uni-bamberg.de