The German housing market is showing signs of stabilization after a period of price corrections, according to the latest Germany Monitor published by Deutsche Bank Research. Despite some indicators of further price declines, there are positive signs pointing to a recovery in the housing market. The Europace Index, which is based on data on private real estate financing carried out via the corresponding platform, has also been rising again since the beginning of 2024.
Interest rates on long-term mortgages have peaked; as prime rates fall, the financial burden on buyers could ease. This, together with high inflation reducing the real debt burden and potentially increasing rents, could put housing costs into perspective. The market continues to be supported by a fundamental shortage of supply, particularly in urban centers where demand continues to outstrip supply.
The experts at Deutsche Bank Research are cautiously optimistic that prices could soon bottom out, supported by regulatory relief and decreasing regulatory uncertainty in the market. This could encourage investors to resume their activities, which would lead to a revival in the construction sector. The residential real estate market could therefore experience a recovery phase in the near future. Interested parties can find the full study free of charge at dbresearch.de.
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