As of: March 6, 2024, 6:43 a.m
By: Max Schäfer
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Despite low prices on the real estate market, a price reduction is rarely possible when purchasing new buildings.
(Symbolic photo) © Julian Stratenschulte/dpa
Many offers, few interested parties: Prices on the real estate market are low, but a trend reversal is becoming apparent.
How much discount is still possible?
Munich – Increased interest rates, less demand and less competition: the changed conditions on the real estate market have caused prices to fall.
Anyone who wants to buy a house or condominium saw themselves in a good position in the negotiations - as long as money was available given the higher interest rates.
A price reduction when purchasing is possible.
But the starting position is increasingly changing.
Some experts are seeing a change.
“The demand for properties to buy has been increasing significantly for several quarters in a row,” said Gesa Crockford, managing director of Immoscout24, to the
Handelsblatt
.
The demand for new apartments has increased by an average of 43 percent since the low point at the end of 2022.
The manager is convinced that since the European Central Bank (ECB) is likely to lower interest rates again, demand will also increase again.
Despite changes in the real estate market: discounts of up to ten percent are still possible when purchasing
Even though greater demand is on the horizon, Crockford believes the situation remains good for buyers.
“There are currently twice as many properties on the market as there were when interest rates were low.” Price reductions of up to nine percent are still realistic when buying condominiums and single-family homes.
However, the lower prices have no impact on rents.
Depending on the location and property, a price reduction of up to ten percent is possible when purchasing real estate.
This is what Daniel Ritter, managing partner of the brokerage company Von Poll Immobilien, told
Handelsblatt
.
What factors go into a possible price reduction?
There is no general answer to how much of a discount is realistic.
According to
Immobilienscout24,
objective motives are crucial in negotiations.
These are defects such as a heating system that needs to be renovated, old windows or mold in the basement.
Modernization costs cannot be deducted as a flat rate when buying a house or apartment.
For smaller renovations, a maximum of 5 to ten percent is possible - depending on demand.
According to the industry portal, if there is a greater need for modernization, this depends on the number of interested parties.
If there is little competition, up to 20 percent is possible, but if there is a lot of competition, a maximum of five percent.
The energy efficiency class can also be an argument for a price reduction.
Energy efficiency class |
Possible discount in percent |
|---|---|
AWAY |
1.9 |
C-E |
3.1 |
F-H |
5 |
Source: Immobilienscout24 |
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During negotiations, the location can also be an argument for a slightly lower purchase price.
B and C locations are opportunities for price reductions, industry insider Daniel Ritter told
Handelsblatt
.
This is particularly noticeable in large cities such as Munich, where the neighborhood has a strong impact on prices.
How much discount is possible when buying real estate?
Supply, demand, the respective location and the status of renovation influence the scope for negotiation.
In an evaluation by Immobilienscout24
, a few respondents
stated that they were able to get a price reduction of 25 percent or more.
However, the majority of buyers ultimately only negotiated a reduction of less than ten percent.
Possible discount in percent |
Share of buyers surveyed in percent |
|---|---|
25 or more |
3.5 |
20-25 |
3.9 |
15-20 |
12 |
10-15 |
36 |
up to 10 |
44.5 |
Source: Immobilienscout24 |
It is unclear how long the situation for property buyers will remain at this level and such price reductions will be possible.
According to Handelsblatt,
Landesbank Baden-Württemberg LBBW expects
a price decline of five percent for residential real estate in 2024.
A study by the real estate company
Prea
comes to the conclusion that the trend will not reverse until the beginning of 2025 at the earliest.
Martin Thiel, co-head of TAG Immobilien, even expects a further decline in value.
It's not just the prices of residential houses and condominiums that are at a relatively low level.
The high interest rates and low demand are also affecting the office property market.
This real estate crisis is now hitting a German bank.
(ms)