
Real estate prices: Will 2024 bring a turnaround?
Residential property prices have risen by just over half on average in recent decades. In metropolitan areas, the price increase has been even more pronounced in some cases. Even the coronavirus pandemic has not stopped this trend, despite a brief dip in price increases.
Why should the trend end in 2024?
Deutsche Bank has concluded that real estate prices could fall from 2024 onwards. This phase is expected to last for around three years, with real estate prices falling by around five percent. The bank does not anticipate a crash in the real estate markets. Deutsche Bank sees one reason for the trend reversal in the fact that the extremely tight supply of residential real estate is expected to ease by 2024. This is because many new buildings will have been completed by then. In addition, population growth is slowing down.
Another reason may be an increase in the key interest rate. The prolonged period of low interest rates has contributed to the rise in real estate prices. On the one hand, it has created favorable financing conditions for owner-occupiers and investors. On the other hand, it has made other investment opportunities less attractive, which has only increased the focus on real estate. Now, however, rising inflation worldwide could prompt central banks to end their low interest rate policy. If loans become more expensive, this could lead to more properties being sold because the loans can no longer be serviced.
What are the arguments against Deutsche Bank's conclusion?
Other research institutes, such as the digital financing platform Europace, do not see any significant changes in the factors that are driving high real estate prices, such as longer life expectancy, more single-person households, net migration to Germany, and low levels of new construction.
Anyone who compares the current analyses with forecasts from previous years will notice that the truly decisive triggers for economic developments or crises are almost never accurately predicted.
Owners should therefore not allow themselves to be unsettled by overly general forecasts. Instead, it is advisable to rely on the expertise and many years of experience of a local quality real estate agent. They deal with the real estate market in their region on a daily basis and are very familiar with developments. They will advise you on the best time to sell your property.
Would you like to know when it is worth selling your property? Contact us! We will be happy to advise you.
Further information can be found here:
- asscompact.de: Will the German real estate boom end in 2024?
- n-tv.de: House prices likely to fall from 2024
- haufe.de: Rents continue to rise
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