Will property prices rise again in 2023?

High energy costs, inflation, and rising interest rates led to a decline in demand for real estate last year. As a result, property prices also fell – for the first time in years – although not nationwide. Will this trend continue in 2023, or will prices soon rise again?

Even though property prices have eased in some regions of Germany, the German real estate market remains tight. In many metropolitan areas, prices remain high or continue to rise. In other regions, however, prices have had to be reduced. Real estate experts disagree on how the situation will develop.

Property prices could rise again

Some optimistic real estate experts predict that property prices will rise again as early as mid-2023. Commercial properties such as sustainable office buildings, logistics centers, and hotels would be the first to feel this trend.

Property prices could fall further

A study published on November 24, 2022, by DZ Bank concluded that purchase prices for residential properties will decline by an average of up to 6 percent this year. According to the study, owner-occupied apartments are expected to be less affected by the decline. Multi-family homes, however, are likely to experience the impact more significantly.

Development inconsistent

However, the situation is inconsistent. New buildings and renovated older buildings appear to be unaffected by the price reductions. For sellers of unrenovated properties, on the other hand, it was more difficult to achieve prices as high as those seen in 2021.

Rising mortgage rates

At the end of December, mortgage rates were between approximately 3.6 and 4.5 percent. Experts at DZ Bank anticipate a further increase this year. This is expected to further reduce demand for real estate. Consequently, the experts conclude that property valuations will also decline. From 2024 onward, price trends could stabilize – provided there is no prolonged economic crisis.

Real estate financing

Real estate financing is still possible under the current circumstances. Even though interest rates have risen compared to 2021, they are still low. If you would like to know what you need to consider, please contact us.

Would you like to know the current value of your property? Or would you like to know how you can finance a property now? Contact us! We would be happy to advise you and, upon request, determine the value of your property.

Notes

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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