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House prices in Germany: Is the turning point coming or will the market continue to fall?
"Experts predict: house prices could fall by 5 to 10 percent. According to Commerzbank, the end of the correction is not yet in sight. Find out more here. #houseprices #real estate market #Commerzbank"
House prices in Germany: Is the turning point coming or will the market continue to fall?
Various real estate platforms have suggested that the decline in house prices in Germany may be coming to an end. Europace reported an increase in prices in all segments and spoke of a possible turning point. Despite these signs, Commerzbank contradicts this interpretation. The bank predicts that the decline in house prices will continue for the time being. According to their analysis, the current downside potential for existing properties is 5 to 10 percent.
According to Commerzbank, prices could only stabilize at a lower level at the turn of the year 2024/2025, provided there is no further significant increase in interest rates. The bank highlights that prices for German residential properties have already fallen significantly since mid-2022, especially for existing residential properties. New developments on the market also depend on interest rates for mortgage loans, which have recently increased slightly again.
The number of transactions in the real estate market is still low compared to previous times. The price expectations of buyers and sellers continue to diverge, which could lead to further price stagnation. According to estimates by the German Bundesbank, from an economic perspective, residential real estate prices would have to fall even further in order to be in line with long-term factors such as interest rates and income.
A 5 percent fall in house prices by the end of the year may be needed to bring property affordability to levels similar to 2010. Commerzbank emphasizes that political decisions could influence a further fall in prices. Additional costs for energy-efficient renovations could further influence the downward potential for prices of existing properties.
Despite initial signs of increased demand for real estate loans, Commerzbank remains cautiously optimistic. She assumes that the prices of existing properties could fall further before they stabilize around the turn of the year. Future developments depend on various factors, including interest rates, income and policy measures.