
Buying real estate: Are there bargains to be had again?
The interest rate shock coincided with rising financing costs and high real estate prices. As prices were no longer affordable for many, real estate sellers had to meet buyers halfway with their asking prices last year. This led to a decline in real estate prices. However, initial indicators suggest that the trend will soon reverse.
Falling inflation – falling interest rates?
While inflation was still above 6 percent in the summer of 2023, it had already fallen to 3.2 percent by November 2023. Investors are now speculating that the European Central Bank (ECB) will cut interest rates as early as this spring. This will naturally have an impact on mortgage rates. Last December, the interest rate on ten-year German government bonds fell below the two percent mark for the first time in a year. Construction interest rates also fell, dropping from over 4 percent to around 3.5 percent for loans with a ten-year term. According to financing experts, the current situation offers considerable financial relief for real estate buyers.
Low prices – high prices
According to figures from the Federal Statistical Office, real estate prices fell by an average of 10.2 percent between July and September 2023. However, it is important to note that the pace of development varies across the individual real estate markets in Germany. While prices fell dramatically in some regions, they fell little or not at all in others. It is therefore advisable to ask a local estate agent about how the real estate market is developing in your region.
However, if interest rates fall, demand for real estate could rise again. When demand rises, prices usually rise again. The current low level of construction activity also means that there will continue to be a shortage of real estate on offer. Some real estate analysts expect real estate prices to rise again in 2025 or even as early as the end of 2024. This means that the window of opportunity for buying real estate will soon close again.
Now is a good time for price negotiations
In the current situation, the opportunities for price negotiations for interested buyers are better than they have been for a long time. Real estate experts recommend being open about your financing limits. Price negotiation and explaining financing options is the job of a professional real estate agent. Let one of them support you. Take advantage of the current combination of a favorable negotiating position for prospective buyers and falling construction interest rates before it is over.
Are you looking for support in finding and purchasing real estate? Contact us! We will be happy to advise you.
Note
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 have the facts of your specific case clarified by a lawyer and/or tax advisor.
Photo: © donogl/Depositphotos.com