Real estate prices in Germany: bottoming out expected, despite price decline - expert opinion

Real estate prices in Germany: bottoming out expected, despite price decline - expert opinion

According to a report by finanzmarktwelt.de, there are indications that property prices in Germany could soon be reaching a turning point, with bottoming out already approaching. The President of the Federal Association of German Volksbanks and Raiffeisenbanks (BVR), Marija Kolak, predicts that residential property prices will continue to fall, but not for long. Demand for private residential property financing is already increasing again, particularly in the area of ​​existing properties and renovations.

A major factor in the decline in residential property prices was the turnaround in interest rates, which led to higher borrowing costs and depressed demand. However, Kolak emphasizes that demand appears to be gradually increasing as many customers adapt their demands to the new environment.

Kolak warns against income-dependent limits on residential real estate loans and believes this is unnecessary. She demands that lawmakers consider social policy, financial stability and consumer protection as a whole package, not in isolation.

With regard to commercial real estate, upheavals such as the trend towards home offices will lead to revaluations. The effects of the Signa insolvency on the cooperative banking sector are assessed as manageable, although some institutions are affected in individual cases.

The graphic shows the development of property prices since 2009, with a long rally after the financial crisis and the price decline from 2022 due to the ECB's interest rate turnaround.

Overall, the statements suggest that the bottoming out of real estate prices is getting closer, which indicates a turnaround in the near future. This could bring increased demand for residential real estate and revaluations in the commercial real estate sector.