The planned heating rules will lower the prices of properties in need of renovation. If a sale is made, the energy performance certificate plays an increasingly important role in the negotiations.
According to brokers and real estate associations, the federal government’s heating plans are leading to falling demand and sometimes significantly lower prices for unrenovated properties. From 2024, according to the plans of the traffic light coalition, every newly installed heating system should be operated with 65 percent renewable energies.
According to the real estate industry, the result is that potential buyers of older houses are holding back. In addition to the higher interest rates, there is now concern about losses in value and expensive investments, for example with old heating systems. That creates uncertainty, explains Daniel Ritter, managing partner at the Frankfurt broker Von Poll.
Prices up to 30 percent lower
Older existing buildings with low energy efficiency in particular are having a hard time: “We are therefore observing declining demand in this segment, also because the costs for renovations are difficult to calculate due to increased craftsman prices and supply chain problems,” says Ritter.
According to Von Poll’s analysis, prices for houses in need of renovation with large plots of land in so-called B and C locations have fallen by between 10 percent and 30 percent. This means real estate in cities such as Dortmund, Wuppertal or Kiel.
The prices for residential buildings in Frankfurt am Main, for example, which have to be renovated by 2030, fell by an average of 14 percent in the first quarter of 2023 compared to the previous year. In Hamburg and Munich, prices fell by 10 percent. In Berlin, prices remained unchanged.
“Noticeable reluctance to buy”
The federal government’s heating plans come at a time when prices for many properties are already falling. According to the Federal Statistical Office, in the fourth quarter of 2022, residential real estate fell by an average of 3.6 percent compared to the same quarter of the previous year – the first price decline within a year since the end of 2010. Compared to the previous quarter, it was even down by 5 percent.
The requirements for heating replacement should now increase the downward pressure. “The combination of higher interest rates and the uncertainty of what costs buyers or owners will incur when replacing a heating system has triggered a noticeable reluctance to buy,” reports Mathias Wahsenak, spokesman for the management of LBS Immobilien in Potsdam. The higher interest rates mean that the cost of home loans has also risen sharply.
Owners are reluctant to replace the heating system
The lower demand inevitably increases the pressure on purchase prices. The certified sales prices often deviated significantly from the offer prices.
Owners also have concerns: Especially when it comes to older properties, possible upcoming investments must be factored in. The Haus & Grund owners’ association suspects that many owners will initially rely on the repair of existing heating systems in order to gain as much time as possible.
Need for renovation as a negotiating advantage for buyers
For buyers, the need for renovations can turn into an advantage in price negotiations. Potential buyers used the need for investment as a means of exerting pressure, observes Daniel Ritter from the broker Von Poll.
Energy certificates and energy values are increasingly becoming relevant factors in the sales process – requested by buyers in order to strengthen their position in price negotiations.
Banks are now also attaching more importance to the energy certificate, which can even be reflected in modern and energy-efficient buildings in the form of small interest discounts, according to Ritter.
With information from Emal Atif, tagesschau.de.