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Real estate market shows trend reversal: demand is increasing, rental price dynamics are weakening
Find out whether the increasing interest in buying property could finally lead to falling rents. Analysis of market trends and impacts on the housing market.
Real estate market shows trend reversal: demand is increasing, rental price dynamics are weakening
The German real estate market is showing signs of a turnaround as demand for condominiums has increased significantly compared to the previous year. Interest in purchasing real estate has increased, particularly in metropolises such as Berlin, Hamburg, Düsseldorf, Frankfurt, Cologne, Leipzig, Stuttgart and Munich, as well as in smaller and medium-sized cities. This development has a positive impact on rents and could moderate rent increases.
The increasing demand for real estate has also piqued the interest of property buyers, which has led to a decline in construction interest rates. Credit institutions assume that interest rates will continue to fall in the next few months. Nevertheless, real estate prices are slowly rising again, with existing apartments becoming more expensive by an average of 0.6 percent. Real estate prices in Cologne and Munich in particular are recording the highest increases, while prices for new apartments are declining.
Despite the positive developments on the real estate market, the lack of housing remains the main problem with rental price developments. A shortage of apartments continues to ensure high demand and drive up rental prices. The high interest rates, construction costs and additional burdens from city fees and energy costs make it difficult to build new apartments. There is also a lack of government funding to counteract the housing shortage.
Experts predict that the trend of rising rents will continue as the housing shortage remains a driving factor in price developments. The “Social Housing” alliance estimates that up to 910,000 social housing units are missing and is calling for measures to increase social housing construction. Despite corrections according to current studies, the need for new housing remains high, especially in regions with continued population growth.