According to estimates by the Volks- und Raiffeisenbanken, real estate buyers can hope for further price declines in many regions. But that only helps to a limited extent, because financing has become more expensive.
Representatives of cooperative bankers expect prices for houses and apartments to fall in many regions of Germany in the coming months.
According to a survey, 71 percent of the board members of Volks- und Raiffeisenbanken in the 14 federal states of the cooperative association expect a mostly slight decline in prices for residential real estate in their respective regional markets in the second half of the year.
“Bottom formation on the real estate market”
For 2024, almost half of those surveyed assume that prices will continue to fall. However, significantly more executives are of the opinion that real estate prices will remain constant (37 percent) or increase slightly (13 percent) for the coming year.
“On balance, the real estate market will bottom out,” says Ingmar Rega, chairman of the board of the cooperative association, interpreting the results. “The current level for long-term lending rates would then become the market standard in the future.” The cooperative association based in Neu-Isenburg near Frankfurt represents institutes in all federal states with the exception of Bavaria and Baden-Württemberg.
Financing of new construction projects difficult
The executive boards of the 229 institutes that took part in the survey are pessimistic when it comes to financing new construction projects. The majority expects a slight or strong decline in 2023 (73 percent) and 2024 (63 percent). “In addition to the turnaround in interest rates, the main impact here is significantly higher construction costs,” said Rega. “In order to stimulate the new building, bureaucratic hurdles should be removed.”
The recent rise in lending rates is making real estate financing more expensive. “Under the current conditions, customers must have good creditworthiness and, above all, sufficient equity,” affirmed Rega. If you bring in more of your own money, you usually get a slightly cheaper loan.