Vonovia: Reduction in Interest Rates Boosts Stock Price

Last Updated: 4. Dezember 2023By

„Be wise – go to the building!“ Such an old and now probably outdated saying from better decades.

This has now also been understood by the housing construction companies, because a lack of skilled workers, much more expensive building materials and also rising interest rates have been making life difficult for the large real estate companies for 2 years.

Real estate industry needs fresh impulses Whether it’s TAG Immobilien, LEG Immobilien or Vonovia from the DAX, they all suffer from the problems listed above.

Understandably, investors and investors also have this situation firmly on the radar of their evaluations, as do the large number of analysts.

Thus, the industry urgently needs fresh impulses and good news or a lot of positive speculation!

No statements yet about interest rate cuts The „prayed“ the market and its participants together so many times and exactly this happened last Friday. Then the investors from all over the world listened closely to the words of Jerome Powell, the US Federal Reserve chief, and wanted only one thing to hear: When will the interest rates drop again?!

But Powell didn’t say a word about that, let alone give a date when the interest rate hike cycle could have ended. As usual, the chairman of the FED kept referring to the review of the new facts, as on every meeting.

Investors bought after Fed speech But instead of sending the international indices on a downward trend, the international investor crowd decided to do the opposite, namely to buy. So the Dow Jones was driven above the 36,000 point mark and the DAX above the 16,300 point mark.

Because now – and this seems to be the consensus of the market right now – one no longer expects further interest rate increases at the next Fed meeting on December 13th.

On the contrary, investors are increasingly hoping and speculating for an interest rate cut!

Meanwhile, according to the FedWatch tool, market observers now see an interest rate cut at a current 62%. Thus, investors already expect today that the US base rate, currently at 5.25% – 5.5%, could be at 4.5% – 5.0% by June 2024.

Good prospects drive the stock up But that brings us back to the real estate companies and especially to Vonovia.

The prospect of falling interest rates alone lifted the stock by 3.8% to 26.49 euros last Friday.

In addition, the chart technique – a buy signal was generated at 26 euros – has added another positive momentum to the stock and now the way is free to climb the annual high at 28 euros.

The Vonovia stock has generated a fresh buy signal. Positive impulses for Vonovia ahead? In addition, the demand for affordable housing is particularly strong in Germany and is expected to continue to rise, resulting in further rising rents. Of course, these factors ultimately determine that the share price will continue to look for its way up.

It must be said, however, that the Vonovia papers have been running nicely since March of this year, at a low of 15.65 euros and last Friday at 26.49 euros.

Still a lot of catch-up potential! But if the topic of interest rate cuts really materializes next year, this could give the titles further positive impetus. And one should not forget that the Vonovia share was still above 56 euros at its peak in August 2021.

Ultimately, therefore, there is still a lot of catch-up potential and happy is the one who gets into position in time, because housing will remain a sought-after commodity – do not forget that.