“Up to ten percent”
“Noticeable price correction” in real estate prices – but only briefly
By Laura Esslinger
01/21/2023, 5:10 p.m
The good news is: Real estate prices are falling. The bad: According to the portals Immowelt and Immoscout24, a sustained drop in prices is not to be expected. A purchase is therefore still out of the question for many.
Real estate has become cheaper recently. This is shown by figures from the real estate portals Immowelt and Immoscout24, which show a significant drop in prices on the market for the fourth quarter of 2022. Immoscout24 speaks of a “noticeable price correction of up to ten percent”.
However, this does not mark a longer-lasting downward trend, the market is already turning again. “A sustained drop in prices is not to be expected, since the federal government’s new construction targets are a long way off,” says Gesa Crockford, Managing Director of Immoscout24. “In the medium term, we expect a shortage of supply that can turn the market around again.” Overall, the German housing industry expects around 200,000 newly built apartments for 2023 – but the federal government wants to come to 400,000 annually.
The asking prices are for the most part still well above the level of 2021. At 2714 euros per square meter, the asking price for existing condominiums has increased by 3.5 percent compared to the previous year – even if it rose by an average of 4.3 percent in the fourth quarter of 2022 sank. In new buildings it is minus 6.4 percent per square meter, which roughly corresponds to the level of the same period in 2021.
The sharp rise in construction interest had recently burst the dream of owning a home for many. But now interest is slowly coming back. “Seasonally adjusted demand for real estate appears to have bottomed out in the third quarter,” says Crockford. “In the metropolises, we are already seeing signs that demand from those interested in buying is picking up again.” Interest in single-family homes remains high. Asking prices rose by 2.7 percent for existing properties and by 7.3 percent for new buildings compared to the same period last year.
Munich and Hamburg cheaper
The real estate portal speaks of a trend reversal. In the fourth quarter of 2022, asking prices for existing apartments in 13 of 14 major cities surveyed fell compared to the previous year. In Munich and Hamburg, they each fell by 6 percent for existing apartments – with Munich having a significantly higher price level of EUR 8,953 per square meter than Hamburg (EUR 6,424).
Frankfurt am Main and Stuttgart are also becoming cheaper: In Stuttgart, asking prices have fallen by two percent (5419 euros per square meter) and in Frankfurt by as much as five percent (6163 euros). In Berlin and Cologne, on the other hand, the real estate market is currently even more robust. In the capital, the square meter price fell by only one percent to 5040 euros, in Cologne it remained constant at 5276 euros.
The development in medium-sized cities is also interesting: In Nuremberg, the price level fell by six percent to 3881 euros, in Hanover by seven percent (3648 euros). Real estate in Essen has the biggest price drop in the study with minus eight percent (2767 euros). “Apparently, the prices of real estate in these cities were recently overvalued and are now approaching a more market-oriented level,” says Immowelt. In Dresden (down one percent, 2842 euros) and Leipzig (down two percent, 2584 euros) the price slide was less.
The article first appeared at Capital.de.