
Residential property price increases slow down – is this the start of a market turnaround?
Migration to German cities is slowing down
According to the study, the following observations were made: Although the pandemic has not necessarily affected price levels, it has had an impact on migration to cities. As a result, fewer people than before are looking for apartments in metropolitan areas. Fewer young people are also coming to the big cities to study and work. As a result, the number of residents in some cities such as Stuttgart and Berlin is stagnating or declining.
This differs from the trend in recent years, when there was a noticeable exodus from cities among families and low- and middle-income earners. This was caused by rising prices on the real estate and housing market. Unless they had no other choice, people moved to the suburbs or even further out into the countryside. In addition, more and more young people, especially from abroad, moved to the cities to study, complete their education, or work.
The study cited structural change in the automotive industry as another reason for the decline in population in some regions and cities, which led to a reduction in the number of residents, particularly in Stuttgart. According to the study, the population there fell from around 615,000 to just under 605,000 between 2019 and 2021. The study cites the switch to electric mobility as the reason for this change.
Rise in interest rates and yields
LBBW forecasts that interest rates and yields on mortgage loans and bonds will rise moderately in the coming years. However, the ECB is not expected to raise its key interest rate before 2024. Interest rates are likely to remain at a low level for the time being.
Energy efficiency will have a greater impact on prices
The real estate market will continue to develop unevenly. In addition to the location of the property, energy efficiency will also have a greater influence on property prices in the coming years.
This is due to the climate protection targets set at EU level. In future, the energy performance of a building will also have a significant impact on its price.
As a result, the energy performance of a property will become increasingly important for its price. Whether and how a house is insulated or how the building is heated will determine the selling price that property owners receive when they sell.
What does this mean for owners and buyers?
According to the authors of the study, the housing shortage will continue for several years. This is because residential real estate remains an attractive investment. However, real estate buyers can expect the market to ease slightly. For owners who are ready to sell, this means that they will continue to get good prices for their properties, depending on their location and condition.
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Notes
For reasons of readability, the generic masculine form is used in this text. Female and other gender identities are expressly included where necessary for the meaning of the text.
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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