Real estate prices are under pressure. The supply of modern new-build houses has recently declined. picture alliance / Zoonar | elxeneize
The Institute for the World Economy has published new figures and data in the renowned real estate price index.
While the decline in prices for condominiums, for example, has slowed somewhat, there has been a significant decline in apartment buildings.
Moritz Schularick, President of the Institute for the World Economy, says: “Supply and demand are not yet quite aligned on the real estate market.”
Real estate prices are currently very volatile. Although the finding is not necessarily new, it is now reinforced once again by the Greix real estate price index. This appears quarterly and has now been published by the Institute for the World Economy (IfW) in Kiel. The study not only shows the volatility of the market, but above all also shows a big loser in the industry.
According to the researchers from Kiel, real estate prices in Germany have developed differently in recent months. In the first quarter of 2024, there were some major differences depending on the residential segment and location. However, the stabilization that had already begun in the previous months tended to continue. In addition, the price decline has slowed, according to the German Real Estate Index.
Researchers give reasons for the negative trend
This development can be seen particularly in condominiums and single-family homes. Prices for these buildings have continued to stabilize since the beginning of the year and have tended to move sideways, says IfW President Moritz Schularick Handelsblatt quoted. But there are deviations – both upwards and downwards. However, the expert suspects that this may still be a small number of transactions. “It is still too early to declare that the German real estate market has bottomed out,” is his conclusion.
Read too
Buy property now or would you rather continue to hope that prices will fall? That’s what a top broker says
Daniel Ritter, managing partner of the large real estate agent Von Poll Immobilien, sees it differently. He has a clear recommendation for those interested in real estate and says: “I wouldn’t wait any longer.” The trend in the real estate market is about to turn.
The index for real estate prices that has now been published is very relevant in Germany. Because: It is calculated by experts based on actual, notarized sales prices. It reflects the development of a total of 19 cities and districts – since 1960. According to the IfW, the study is also based on more than two million transaction data.
Read too
Real estate prices in Germany have fallen more sharply than anywhere else – but the interest rate shock has now been digested, says Deutsche Bank
Index reveals losers in real estate prices
According to the index, there is a clear loser when it comes to property prices. According to studies by researchers from Kiel, the decline in prices for apartment buildings has accelerated significantly. The minus is now almost eleven percent. This is a noticeable development compared to the previous quarter, where the decline was around five percent. But: According to expert opinions, there is “high volatility, especially in this segment, due to low transactions”. The significance of the minus is limited accordingly.
The prices for condominiums have only fallen slightly compared to the previous quarter, by 0.7 percent to be precise. Prices for single-family homes actually remained practically constant. And according to the index, the situation on the real estate market has also calmed down in the seven largest German cities (Berlin, Düsseldorf, Frankfurt am Main, Hamburg, Cologne, Munich, Stuttgart). The real estate prices for condominiums only changed moderately compared to the previous quarter, the Kiel-based company explained.
Read too
Real estate prices have fallen particularly sharply in these ten cities
This is how real estate prices develop in cities
In general, developments are quite balanced. The price trend in Cologne (an increase of 2.4 percent) and Frankfurt (an increase of 2.2 percent) is still increasing. However, in Berlin (a decrease of 1.9 percent) and Stuttgart (a decrease of 1.4 percent) the numbers are already going down again. While there is no data yet for Munich and Düsseldorf, the values in Hamburg are constant.
Apart from the seven major cities, the picture is inconsistent, reveals Greix. For example, it is noticeable that all cities in the east are recording a minus. In contrast, cities in the west of the country are experiencing a noticeable increase – including Wiesbaden with six percent and Münster with 4.1 percent.
IfW President Moritz Schularick says: “Supply and demand are not yet quite aligned on the real estate market.” The expert believes that the major buying opportunity that is now being announced in some places also appears to be strongly driven by interests.