Residential property prices are heading for a recovery in 2023 after falling. Statisticians, but also the real estate companies themselves, are now assuming this. However, the development is uneven.
Housing could become more expensive again in Germany. This probably applies not only to tenants, but also to prospective buyers. A number of signals indicate this.
For Germany’s largest real estate group, the trend reversal in the real estate market is in full swing: DAX group Vonovia expects the fall in real estate prices to end soon. The bottom in the performance is tangible, said Vonovia boss Rolf Buch when presenting the quarterly figures.
In the past, Vonovia had to repeatedly write down the value of its real estate portfolio due to the real estate crisis and therefore recorded losses worth billions. This is now over: the value of the portfolio is stable, “a quarterly revaluation was not necessary.” Vonovia posted a profit of 335.5 million euros from January to March – after a loss of around two billion euros a year ago.
Interest rate turnaround sends out a signal
According to the Association of German Pfandbrief Banks (VdP), there could be an improvement in residential real estate this year. With the ECB’s expected interest rate turnaround, prices for residential real estate may begin to stabilize in the second half of the year, the association predicted. “The 2024 financial year will definitely remain challenging for all players in the real estate markets,” said VdP President Gero Bergmann.
A few days ago, the real estate platform ImmoScout24 reported after an evaluation that interest on the buyer side had increased again. However, this particularly applies to metropolitan regions. In four out of eight of the regions, the asking prices would again be above the previous year’s level, according to ImmoScout24.
Prices above the previous month but below the previous year
Prices for new and existing properties had already become more expensive in the previous months. According to the house price index EPX from the data service provider Europace, prices for newly built and existing single and two-family homes and condominiums rose in March. The index climbed 0.6 percent to 210.94 points. However, that is still 1.41 percent less than in March last year. There was still little sign of an upswing in construction at the beginning of the year. Construction orders in January were still well below the previous year’s level.
According to Europace boss Stefan Münter, the buying mood on the part of those interested in real estate is primarily driven by the interest rates on the construction loan market, which are already falling again. He expects prices to continue to rise in the coming months.
Buyers and sellers don’t really get along
However, Commerzbank is not quite as optimistic about real estate price developments. According to a study published on Friday, prices for residential property in Germany will continue to fall somewhat: “Low sales indicate further downward potential,” said the experts. Apparently there is still a big gap between the price expectations of buyers and sellers.
Many people could not finance the purchase of real estate at current interest rates, while owners did not want to noticeably reduce the price. According to Commerzbank, the further downward potential for existing properties is five to ten percent, taking into account the costs of energy-saving renovations.