The trend in house purchases in Germany: prices are falling, interest rates are rising, building materials and craftsmen are more expensive.

The trend in house purchases in Germany: prices are falling, interest rates are rising, building materials and craftsmen are more expensive.

The tide is slowly turning for property buyers in Germany. In recent years, the prices for residential buildings have risen sharply, especially in major German cities. But now there are the first signs of a price correction. According to the Europace house price index EPX, purchase prices across Germany have fallen by an average of 6.7 percent. There were also falling prices in the largest German cities. However, these declines are more than offset by increased interest rates. Before the Corona crisis, loans with a ten-year fixed interest rate could be financed at an average of 1.0 percent; the interest rate is now at 4.2 percent. This has a significant impact on home purchases, as a calculation example shows. A property worth 500,000 euros would be significantly more expensive today because interest rates have risen. The costs for new buildings have also continued to rise due to increased construction costs and delivery difficulties for building materials. However, the situation could improve in the future. Economists expect the European Central Bank (ECB) to pause interest rates, so no further interest rate increases are to be expected. In addition, the prices for building materials could fall again and the queues for tradesmen could decrease. It is therefore advisable to wait until the situation regarding interest rates, building materials and tradesmen improves before considering buying a property.

According to a report from m.focus.de, there are first signs of a price correction on the German real estate market. Purchase prices across Germany have fallen by an average of 6.7 percent. However, the increased interest rates are a big factor that offsets the decreased prices. Loans with a ten-year fixed interest rate now cost 4.2 percent, whereas before the Corona crisis it was only 1.0 percent. This has a significant impact on home purchases. A calculation example shows that a property worth 500,000 euros is significantly more expensive today than before the interest rate increase. The costs for new buildings have also continued to rise due to increased construction costs and delivery difficulties for building materials. However, the situation could improve in the future. O