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Downtown Leipzig: buyers make compromises
Photo:
Jan Woitas / dpa
The real estate market has changed more radically in the past year than it has in a long time.
The credit brokerage company Interhyp came to this conclusion after evaluating more than 500,000 completed financing transactions over the past ten years.
"In recent years we have experienced a seller's market," says company boss Jörg Utecht.
Comparatively few properties were available, for which there were usually very many interested parties.
'That's changing now.
Prices are falling, there are significantly more properties available and buyers can also negotiate prices again.«
»After more than ten years of rising property prices, we are now experiencing a downturn for the first time.
However, this is not yet as significant as is sometimes reported,” says Utecht.
However, the development changed significantly in the second half of 2022, in which the decline was around six percent.
»Overall, real estate prices in December 2022 were at the level of mid-2021«.
However, the analysis also shows that the development varies from region to region.
Prices fell the most in Hamburg, Munich and Frankfurt, each by eight percent.
In Cologne and Stuttgart there were minus seven percent and in Leipzig and Berlin minus four percent each.
Buyers make compromises
Buyers are now also paying significantly more attention to operating costs.
"Older and therefore less energy-efficient properties are more affected by the price decline than new properties," says Utecht.
»Real estate built before 1990 is 7.5 percent cheaper.
Real estate built after 2010, on the other hand, only by 4.0 percent.« Banks should nevertheless continue to finance properties with the worst energy efficiency classes G and H and support buyers with modernization and thus on the way to a better energy efficiency class.
In this way, they would contribute to reducing CO2 emissions in the building sector, explains Utecht.
However, the study also shows that buyers are making big compromises in order to be able to fulfill their dream of owning their own home given the still high prices.
In 2022, older and smaller properties in particular were bought – at lower prices – than in previous years.
Between 2020 and 2021, the properties financed through Interhyp were around 38 years old, and by the end of 2022 it was already 46 years.
The average living space of the houses financed through Interhyp fell from around 161 to 156 square meters.
The average living space of apartments remains the same at 80 square meters.
In addition, people have funded other projects.
In other words, the proportion of new buildings sold fell from around 15 to 5 percent, and the company's own building projects fell from around 15 percent to ten percent.
Another finding: investors are withdrawing from the market.
By the end of 2022, the average proportion of investors has fallen from 28 percent to 21 percent, while the proportion of owner-occupiers has risen from 67 percent to 73 percent.
»The purchase of real estate as an investment decision is currently not working.
For investors, the monthly installments are currently simply too high compared to the expected rental income to make it worthwhile.«
Despite the noticeable price declines, the real estate experts are not giving the all-clear.
The circle of those who can afford their own house or condominium continues to shrink.
Interhyp's customers brought in an average of EUR 155,000 in equity in the fourth quarter of 2022.
That is almost 12 percent more than in the same quarter of the previous year.
"The barriers to entry for the real estate market are still too high," says Utecht.