Prices for residential real estate in Germany could fall further in 2024
Prices for residential real estate in Germany are likely to fall further in 2024, according to DZ Bank. The price correction is expected to come to an end in the coming year, according to a study published in Frankfurt on Wednesday. However, average annual declines of 0.5 percent to 2.5 percent are still expected. Real estate in poor locations or with high energy consumption is likely to develop more weakly, wrote analyst Thorsten Lange.
Since the peak of the real estate boom in mid-2022, residential properties have become a good seven percent cheaper, he said. Rising interest rates and high construction costs have halted the upward trend since 2010. In view of falling inflation, many economists expect the European Central Bank (ECB) to lower key interest rates in 2024. Building interest rates have already fallen significantly since October, making real estate somewhat more affordable. Depending on how interest rates develop, initial price increases are also possible over the course of the year.
Politics also play a role, according to DZ Bank: "Continued uncertainty with regard to subsidies for renovation measures or new construction can weigh on demand for real estate and slow down the market recovery." The decline in property prices has so far been slowed by the stagnation in new construction. "The housing shortage and rental growth are also helping to stabilize residential property prices, which are still falling slightly."
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- Despite the anticipated decline in residential real estate prices in Germany, DZ Bank suggests that initial price increases might occur in 2024 if interest rates continue to decrease.
- In their study, analysts at DZ Bank attribute the predicted weak development of certain residential properties to poor locations and high energy consumption.
- The German residential real estate market's recovery could be slowed down by persistent uncertainty regarding subsidies for renovation measures or new construction, according to DZ Bank.
Source: www.ntv.de
