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Poor prospects for property sellers: property prices are falling

The representatives of the cooperative banks in Germany largely assume that prices for houses and apartments in many regions of the country will fall in the coming months. According to a survey by the German Cooperative Association, 71% of the board members of cooperative banks expect a predominantly slight decline in real estate prices in their respective regional markets in the second half of the year.

Almost half of those surveyed expect prices to continue to fall in 2024. For the following year, however, significantly more board members believe that real estate prices will remain stable (37%) or rise slightly (13%).

Ingmar Rega, Chairman of the Board of the Association of Cooperatives, interprets the results as a bottoming out of the real estate market. He expects the current level of long-term lending rates to become the market standard.

However, the management boards of the 229 participating institutions are pessimistic with regard to the financing of new construction projects. The majority expect a slight or sharp decline in 2023 (73%) and 2024 (63%). Rega attributes this mainly to the significant rise in construction costs and calls for bureaucratic hurdles to be removed in order to boost new construction.

The recent increases in lending rates make financing real estate more expensive. Rega emphasizes that under the current conditions, customers must have a good credit rating and sufficient equity in order to obtain more favourable loans, with more equity generally leading to better conditions.

Exceptions to this are special properties such as care properties, as demand for these in particular is expected to increase further in the coming years. After all, as society ages, the demand for care places will also increase.