Financial expert predicts an end to the decline in residential property prices - new opportunity for buyers. Analysis by experts from Germany and Austria.

Financial expert predicts an end to the decline in residential property prices - new opportunity for buyers. Analysis by experts from Germany and Austria.

According to a report by www.diepresse.com,

According to a German expert, the end of the decline in residential property prices is near. In its research, the “Presse” came to a similar conclusion for Austria – buyers are faced with a new opportunity.

Expert Marija Kolak, President of the Federal Association of German Volksbanks and Raiffeisenbanks (BVR), predicts that the price correction for residential real estate will continue, but not for long. She expects prices to fall further through 2024, but bottoming out is getting closer due to high demand. In Germany, residential property prices have fallen by around seven percent since their peak in mid-2022, mainly due to the interest rate turnaround, which has led to higher borrowing costs and decreasing demand from potential buyers.

However, demand for private residential property financing is slowly increasing again, particularly with regard to existing properties and renovations. Marija Kolak observes that many customers will adapt their demands to the new environment, which will lead to an increase in demand for condominiums. She also criticizes income-dependent limits on residential real estate loans as unnecessary and calls for the legislature to take a holistic approach to social policy, financial stability and consumer protection.

In addition, Kolak is monitoring the impact of the Signa bankruptcy on the commercial real estate market. Although the cooperative banks are only affected in individual cases, she considers the high risk that has arisen from the business model with high-quality commercial real estate to be noteworthy. The group will keep a close eye on developments in the medium-sized property developer segment in order to monitor possible impacts.

Overall, the analysis suggests that the residential property market in Germany and Austria is facing changes, as prices are expected to bottom out soon and demand for residential property financing is gradually increasing again. Nevertheless, risks remain in the commercial real estate market, particularly in connection with specific business models and bankruptcies.