The forecasts are not good: the number of new apartments is set to fall significantly in the coming years and there are signs of a crisis on the housing market. The expected lower supply will be met by higher demand, with a corresponding impact on rental and purchase prices. As always, the effects on the real estate market are likely to vary greatly from region to region. Nevertheless, with the help of comprehensive market data, it is easier to predict future price trends in certain regions or districts.
Development of rental and purchase prices
The German government's plan was ambitious: The construction of 400,000 new homes per year was targeted at the end of 2021. However, only around 295,000 new apartments were built in 2022, and the number is set to fall even further in the coming years. The GdW (Federal Association of German Housing and Real Estate Companies) only expects a target of around 200,000 new apartments per year. According to the association, the number of building permits issued in the first half of 2023 fell by 27.2 percent year-on-year to 135,200 approved apartments. The target is also likely to be missed by a wide margin this year.
Real estate prices in Germany have risen sharply in recent years. However, due to the full force of the interest rate policy, purchase prices have fallen again in many places. Only the prices of detached and semi-detached houses show a certain stability.
However, there are significant regional differences in the development of real estate prices. Location continues to play a key role. However, the focus is increasingly on the energy efficiency of properties, which has an impact on supply and demand and therefore on price trends.
Important macroeconomic factors...
... which influence real estate prices are:
- Interest rates: Low interest rates make it easier to take out a mortgage and buy a property. Higher interest rates can make it more difficult to buy real estate and lower prices.
- Economic situation: An increasingly weaker economy can lead to fewer people being able to afford a property.
- Demographics: Population trends and the composition of the population can have an impact on demand for real estate. The trend towards single households continues.
- Politics: Political decisions such as taxes or regulations can have an impact on the real estate market. One example is the property tax reform, which is due to come into force in 2025. Or the introduction of rent controls. Rent controls have been introduced in cities such as Berlin and Hamburg to limit the rise in rents
- The introduction of building regulations can also influence the real estate market. More complex building regulations can lead to fewer new properties being built, which reduces supply and increases prices accordingly.
More information in the webinar on 21.09.2023
Real Estate Pilot AG and Nexiga are intensifying their strategic cooperation to provide high-quality real estate and market data. Together, they are focusing on the intelligent use of data to automate processes, create strategies, make decisions and optimize planning. You can find out more here.
In the webinar, Real Estate Pilot AG and Nexiga will jointly present Germany-wide rental and purchase price data in a detailed and comprehensive presentation.
This webinar provides insights into the extensive data options and also provides information on other relevant data for the real estate industry. The data presented comes from Nexiga and GeoMap, the online database of Real Estate Pilot AG.