Falling real estate prices due to high key interest rates: What this means for the financial world - Analysis 2024

Falling real estate prices due to high key interest rates: What this means for the financial world - Analysis 2024

According to a report by amp2.wiwo.de, property prices in Germany fell by more than ten percent last year as the European Central Bank raised its key interest rate. Analysts expect this trend to continue next year, with an expected average price decline of 2.8 percent. Higher interest rates have pushed about half of potential buyers out of the market, and rising utility costs have also increased housing costs for homeowners. This trend will lead to further price declines on the German housing market in the coming years. At the same time, the supply of affordable housing is expected to deteriorate, while the number of building permits for new homes has collapsed.

These developments are likely to lead to continued misery in the German housing market, as many construction projects are on hold due to high construction costs and poor financing conditions. The federal government had set itself the goal of building 400,000 new apartments every year in order to meet the increasing demand in large cities. However, experts do not expect the construction difficulties to end quickly.

The real estate industry and housing market will therefore continue to experience severe turbulence, which will impact project developers, construction companies and potential home buyers. It is important to closely monitor these developments in the real estate market in order to appropriately assess and respond to the impact on the industry and the market.