Price stabilization for unrenovated houses: trend reversal after energy cost fears

Price stabilization for unrenovated houses: trend reversal after energy cost fears

Prices for unrenovated houses have fallen sharply recently, mainly due to fears of high energy costs and uncertainty regarding heating laws. However, analysis from Jones Lang LaSalle (JLL) suggests that this downtrend has been halted. Sören Gröbel, residential real estate expert at JLL Germany, explains that the costs for energy-saving renovations for older, unrenovated houses are now deducted almost directly from the purchase price, but construction costs have stabilized and there are even slight declines in some trades. Financing costs have also stabilized following the rise in interest rates, which has meant that the price decline has stopped for the time being.
The analysis shows that the price difference between apartment buildings with the best and worst energy efficiency ratings averaged 25.1 percent last quarter, compared to 26.9 percent in the previous quarter. The price discount compared to buildings with the best energy efficiency classes is on average 16.7 percent, slightly less than in the previous quarter. This shows that the sharp decline in prices for unrenovated houses, which began in the second half of 2021, has stopped since spring 2023.
With rising electricity and gas prices, the energy efficiency of properties is becoming more important to buyers. New requirements in the federal government's heating replacement law have created additional uncertainty. This led to a larger price gap between energy-efficient new residential properties and older existing buildings with poor energy performance. According to JLL, rural regions could increasingly be affected by higher price discounts, as energy-saving renovations are often not profitable for landlords there. This could further widen the gap between old and new objects.