Prices are stabilizing – a “last” opportunity for buyers?

Last year, real estate prices fell more sharply than at any time since the turn of the millennium. The situation on the German real estate markets has since stabilized overall. However, the pace of this stabilization varies depending on the region. What does this mean for buyers and sellers?

In some German cities, such as Berlin and Hamburg, market experts are observing a return of buyers to the real estate market. Alongside demand, the volume of mortgage loans granted has also increased again. For Frankfurt am Main and Munich, this has already led to a slight rise in property prices.

Even on average across Germany, according to the financing service provider Interhyp, real estate prices rose by around one percent this year from January to April compared to the previous quarter. This contrasts sharply with prices that fell by 8.4 percent last year – the steepest decline in approximately 24 years.

Is this the start of a trend reversal?

Market experts say that the turning point for buying owner-occupied properties is around €4,500 per square meter. With current financing rates settling between 3.5 and 4 percent, homeownership will once again be affordable for a broad range of buyers.

Differences between city and country

However, when considering real estate price trends, a distinction must be made between metropolitan areas and rural regions. In many rural areas, prices per square meter are below €4,500, and in many places even below €3,000. Depending on demand, prices can therefore rise in these areas.

The trend is also uneven in Germany's seven largest cities. According to the Kiel Institute for the World Economy (IfW), while prices in Cologne and Frankfurt rose by 2.4 and 2.2 percent respectively in the first quarter of 2024 compared to the previous quarter, they fell by 1.9 and 1.4 percent in Berlin and Stuttgart, for example.

What does this mean for buyers and sellers?

Since further interest rate hikes by the ECB are not expected, and many experts even anticipate interest rate cuts this year, further price reductions are unlikely. For prospective buyers, now is a good opportunity to purchase property before prices rise more significantly again.

Many sellers are currently looking for buyers for their properties. This means that buyers still have good negotiating opportunities. Experts advise sellers to disclose their financing options. This gives sellers the opportunity to react to the current market situation.

But now is also a good opportunity for owners to sell, as purchase prices are still very high – despite the price drops. Those who sell their property now generally sell for a higher price than they paid for it.

However, it's difficult for both parties to reach an agreement. Therefore, it makes sense to contact a neutral, local, high-quality real estate agent. They will professionally assess the property's value and reconcile the two parties' price expectations.

Do you have questions about the development of the real estate market in our region? Are you looking for a property or would you like to sell one? Contact us! We would be happy to advise you.

Notice

For the sake of readability, this text uses the generic masculine form. Female and other gender identities are explicitly included where relevant to the statement.

Legal notice: This article does not constitute tax or legal advice for any specific case. Please consult a lawyer and/or tax advisor to clarify the facts of your individual situation.

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