Real estate market in Hesse: Dream of owning your own home turns into a nightmare!

Real estate market in Hesse: Dream of owning your own home turns into a nightmare!

The real estate landscape in Hesse shows continued high demand for residential property, although the market is characterized by high prices and building interest rates. A recent survey showed that almost a third of the Hessian population plans to purchase a property in the near future. According to a report by fr.de Commerzbank is recording a notable increase in demand for financing offers. However, purchasing real estate is made more difficult by the sharp rise in prices and interest rates.

Despite a decline in prices in 2022 and 2023, the costs of condominiums in Frankfurt and Hesse remain high overall. New buildings in Hesse currently cost an average of around 6,000 euros per square meter, which corresponds to a price almost doubling over the last ten years. In Frankfurt the price is even higher. In addition, the effective interest rate for private housing loans is almost four percent. A majority of 77 percent of those surveyed consider real estate prices to be overpriced, while only 17 percent consider the construction financing costs to be reasonable.

Market development and future outlook

Analysts are predicting a slight relaxation on the real estate market, but uncertainty about the future viability of real estate financing remains. Since building interest rates are expected to remain high, the time to purchase a home does not seem ideal at the moment, but according to experts it is not impossible. Commerzbank therefore recommends seeking advice from experts in order to examine suitable options for construction and follow-up financing.

In addition, it should be noted that the topic of sustainability has become less important. Only 45 percent of respondents attach importance to energy efficiency, compared to 60 percent in 2022. It also shows that only 21 percent pay attention to ecological building materials. Budget issues and a confusing legal situation may be reasons for this decline in interest. Despite these challenges, demand for financing remains strong as many experts do not expect any significant corrections in property prices.

Overall, the real estate market in Hesse remains characterized by challenges, but the ongoing demand and willingness to finance show that many people are holding on to their dream of owning their own home. Commerzbank states that planning with scope for future construction financing is advisable in order to do justice to market conditions.