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Rising real estate prices: trend reversal expected in the market
Real estate prices are rising again, rents could follow. New study points to a turnaround in the market. Discover the possible effects.
Rising real estate prices: trend reversal expected in the market
A new study suggests a turnaround in the real estate market that could show prices are set to rise again. According to ImmoScout24, the asking prices in four out of eight metropolises are already higher than last year. The increased interest in buying property may have been boosted by the fall in interest rates in Germany. The managing director of ImmoScout24, Gesa Crockford, explains that interest in purchasing property has increased significantly compared to the previous year, especially in major cities.
Prices for residential property in Germany fell by an average of 8.4 percent in 2023 due to weak demand at a record pace. In the first quarter of 2024, the asking prices for existing apartments for sale rose on average across Germany by 0.6 percent compared to the previous quarter, according to ImmoScout24. Nevertheless, prices were still 2.5 percent below the previous year's level. Price pressure is expected to continue to increase, especially if the European Central Bank (ECB) cuts interest rates from mid-year.
ImmoScout24's analysis continues to show high demand pressure on the rental market. Rental prices are expected to continue to rise because too little is being built. The gap between purchase and rental prices could continue to close after purchase prices were significantly higher for a long time. On average, existing apartments were 1.7 percent more expensive when rented at the beginning of the year than in the previous quarter. The price for new apartments rose by 1.6 percent.
Munich remains the most expensive city for rental apartments in Germany. A two-room apartment with 70 square meters costs an average of 599 euros in an existing building and 833 euros in a new building. In Munich, the basic rent amounts to 1,433 euros or 1,745 euros for a new building. At the beginning of 2024, the price per square meter for rental apartments in new buildings nationwide was on average 11.90 euros (existing prices: 8.56 euros), while in Munich it is more than double at 24.93 euros in new buildings and 20.47 euros in existing buildings.