Status: 07/14/2022 3:45 p.m
The rising construction costs and building interest are having an effect. Demand from potential buyers of apartments and houses is falling. This is already leading to falling prices in some German metropolises. On the other hand, rents are rising.
Demand for properties to buy in large German cities fell in the second quarter. This also led to falling prices, as the online portal Immoscout24 announced. “Apartments and single-family houses for sale in the German metropolises of Düsseldorf, Frankfurt, Hamburg, Cologne, Munich and Stuttgart have fallen by up to 6.6 percent in asking prices.”
After that, prices for single-family homes fell significantly: Existing single-family homes were significantly cheaper in all major German cities in the second quarter, with the exception of Berlin. In Cologne, for example, prices fell by four percent within three months, and in Stuttgart by as much as 6.6 percent. However, the nationwide trend in real estate prices – i.e. in relation to all regions – was still slightly upwards.
price adjustment phase
The real estate market is in a phase of adjustment to the new economic reality, explained Immoscout24. The consequences of increased construction costs, high inflation and significantly higher interest rates are clearly noticeable. “For the first time since the financial crisis of 2008, we are seeing such significant price corrections, especially in new-build condominiums and single-family homes in existing and new buildings,” explained Immoscout24 Managing Director Thomas Schroeter. Prices for existing condominiums then stagnated in Munich, Stuttgart and Hamburg, while they continued to rise in Berlin, Düsseldorf and Cologne.
“Providers currently have a much harder time finding buyers for their real estate offers,” explained Schroeter. The demand on the real estate portal has fallen by 36 percent compared to last year, while the number of advertised offers has increased by 46 percent. Advertisements also stayed online longer than in the previous year.
Price negotiation more possible again
Potential buyers with enough equity would benefit from the falling offer prices. “You can currently find significantly more offers and can negotiate the purchase price again sooner than before.” For many prospective buyers, on the other hand, it is now much more difficult to realize the dream of owning a home than it was six months ago due to the high interest rate level of over three percent. “The monthly installments have doubled in price compared to the low interest rates last year for a typical financing model.”
However, the significantly higher financing costs for the purchase of real estate lead to an increasing demand for rental apartments. Immoscout24 reported an increase of 48 percent here. For the second quarter of 2022, the online platform’s WohnBarometer shows that the asking prices for rental apartments throughout Germany are climbing much more strongly than recently. Existing apartments were offered on average 2.7 percent more expensive than at the beginning of the year. There was an increase of 3.6 percent for new apartments. The national average for asking rents for existing apartments was EUR 7.66 per square meter and for new apartments EUR 10.59.