A significant correction in residential real estate prices in Germany is already underway, and experts from Commerzbank are forecasting further declines in the coming months. There is clearly still a large gap between the price expectations of buyers and sellers.
Prices for existing residential properties have fallen significantly since mid-2022, in particular due to interest rate increases as a result of changes in the central banks' monetary policy. Prices for existing properties were on average 14% lower at the end of 2023 than in spring 2022, while prices for new builds were on average 5% lower. Low sales indicate that the price correction is not yet complete.
Despite the fall in property prices, the number of transactions is still low as many potential buyers cannot afford to buy a property, partly due to the current financing conditions. The Bundesbank estimates that prices will have to fall even further to bring them back in line with factors such as interest rates and income. "Compared to the first quarter of 2024, they estimate that there is still potential for a further correction of 5 to 10 percent," says Commerzbank.
Source: commerzbank.de
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