Buying a house is more expensive than ever: prices continue to rise, but there is hope

Buying a house is more expensive than ever: prices continue to rise, but there is hope

According to a report from www.focus.de, house prices have been rising continuously for years. From 2014 to 2022, the purchase prices for residential buildings have almost doubled, especially in major German cities such as Munich, Berlin and Hamburg. But there is good news: purchase prices have actually fallen this year. According to the Europace house price index EPX, there was a decline of 6.7 percent across Germany from June 2022 to August 2022. This trend continued in the third quarter, with prices falling in 13 of the 14 largest German cities. However, the lower prices are more than offset by the increased interest rates. Interest rates have risen from an average of 1.0 percent before the Corona crisis to currently 4.2 percent. This has a huge impact on home buying. This development increases the overall costs of buying a house significantly. In addition, the costs for new buildings continue to rise, as increased construction costs and a shortage of craftsmen lead to higher prices. Despite the current falling price level, it is expected that interest rates will only return to a lower level in a few years. Economists predict that interest rates will fall by 0.6 percent in 2024 at the earliest and will only fall again to around 3 percent in 2025. Nevertheless, demand for housing in large cities remains high, while supply is limited. This could cause house prices to rise again as interest rates fall. However, the situation is easing somewhat for new buildings as building materials are available again and the queues for tradesmen are getting shorter. For people who want to own their own home, it is recommended to wait until the situation regarding interest rates, building materials and tradesmen eases further. There is currently a general trend of falling prices across all three categories. It remains to be seen how far prices will fall, but the best time to buy a home may be when the current trend reverses.