
Real estate prices are plummeting – but you can still sell successfully
The decline in real estate prices is probably the sharpest year-on-year decline and even since the turn of the millennium. This is the first time that real estate prices have fallen at all since 2007.
Reasons for the price decline
The real estate industry has had a crisis-ridden year in 2023, with residential property prices falling by 8.4 percent. According to statisticians in Wiesbaden, prices fell by 7.1 percent in the fourth quarter of 2023 compared to the same period last year and by 2.0 percent compared to the previous quarter. The real estate market has been on a downward trend since mid-2022, the peak of a long-standing boom. Expensive cities in Germany have been particularly hard hit.
The reason for the falling prices was the significant rise in interest rates, which also made loans considerably more expensive. This in turn meant that many people could no longer afford to buy real estate and large investors no longer considered investments to be profitable. At the same time, demand for housing remains high, especially in cities, while new construction is in crisis due to rising interest rates and expensive materials.
Hope for an interest rate turnaround: Will the downward trend end in the summer?
Nevertheless, some experts expect prices on the real estate market to stabilize in the coming year. They anticipate that prices will stagnate and remain flat or fall only slowly. Jens Tolckmitt, head of the Association of German Pfandbrief Banks (vdp), emphasizes: "Housing remains extremely scarce in Germany, especially in metropolitan areas."
The Vdp therefore forecasts a possible stabilization of residential real estate prices from mid-2024 onwards. This is because the biggest uncertainties have now largely been eliminated, with inflation in particular stabilizing. In March 2024, the inflation rate in Germany was only 2.2 percent. Thanks to the favorable inflation trend, an interest rate cut by the European Central Bank in June is even conceivable.
Why now is the right time to sell real estate
Now is still a good time to sell, especially if you own property in less sought-after areas such as rural regions or unattractive neighborhoods. However, you should bear in mind that the price must not be too high. Sellers should now be prepared to lower their asking prices somewhat and adjust them to market conditions. Owners of unrenovated or energy-inefficient buildings can also benefit from selling now. Selling can often be a cost-effective alternative to renovation and still offer attractive returns.
An experienced real estate agent can help you sell your property at market value and make the right decision.
Are you planning to sell your property or residential real estate? Don't hesitate to contact us. We will be happy to advise you.
Notes
For reasons of better readability, the generic masculine form is used in this text. Female and other gender identities are expressly included insofar as this is necessary for the statement.
Legal notice: This article does not constitute tax or legal advice in individual cases. Please consult a lawyer and/or tax advisor to clarify the facts of your specific case.
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