Price trend reversal: Analysis shows stabilized costs for unrenovated houses

Price trend reversal: Analysis shows stabilized costs for unrenovated houses

Prices for unrenovated homes have fallen sharply recently, but a recent analysis suggests a trend reversal. According to a report by real estate specialist Jones Lang LaSalle (JLL), there are various reasons for this development. Experts like Sören Gröbel from JLL Germany explain that the costs for energy-saving renovations in older houses are almost the same as the purchase price, which has led to a drop in prices. But recently construction costs have stabilized, even reduced in some cases, and financing costs are now stable following an increase in interest rates. This means that the price decline has stopped for the time being.

JLL's analysis shows that the price difference between apartment buildings with the best energy efficiency classes A/A+ and the worst classes G/H was 25.1 percent in the first quarter. Compared to the final quarter of 2023, this difference was 26.9 percent. The average price discount compared to buildings with the best energy efficiency was 16.7 percent. This is slightly less than the previous quarter. Sören Gröbel emphasizes that the sharp drop in prices for unrenovated houses has stopped since spring 2023.

Real estate buyers are now placing greater value on low energy consumption, particularly due to rising electricity and gas prices. New legal requirements regarding heating replacement have led to uncertainty and have further widened the price gap between energy-efficient new buildings and older buildings with poor energy performance. JLL regularly evaluates around 5,000 listings of apartment buildings, which are primarily rented out by professional investors. Similar price reductions can also be observed for single- and two-family homes, as the higher energy costs are borne directly by the owner.

The price decline of unrenovated houses could continue, particularly in rural regions, as energy-saving renovations are often not profitable for landlords. This could lead to even greater price discounts as the cost of remediation outweighs the potential lower revenues in these regions. The gap between old and new properties is likely to continue to widen there.