Real estate climate not in top form in spring 2023

The German Real Estate Climate reflects the mood on the real estate market. This is a "seismographic instrument" that identifies economic turning points in the real estate market at an early stage and provides important information. 

The Real Estate Climate is based on a survey of 1,200 German market experts and was developed specifically for the real estate industry. The analysis shows that the market is holding its own despite economic and geopolitical challenges. 

However, the mood is subdued. In the current monthly survey, the German Real Estate Climate declines for the second time in a row by 2.2 percent to 72.5 index points. The index is thus roughly at the level of January 2021, but for the individual residential segment the decline is only 0.6 percent. The retail climate suffered the greatest change of 14.3 percent. 

For the average prospective real estate buyer, these figures remain rather abstract. Anyone wanting to buy or sell a property is primarily interested in the price. In this respect, there is currently a certain degree of uncertainty among laypersons. This results primarily from the significant changes in financing conditions. 

Prospective buyers can no longer finance everything, need more equity, have to calculate higher living costs due to inflation and, moreover, higher energy costs. Real estate sellers cannot add a little extra to their desired selling price and can no longer choose the buyer from among several applicants, which was standard practice for many years. Sales negotiations are much tougher than they were a few months ago.

However, with a little negotiating skill, regional market knowledge and good arguments, good prices can still be achieved. This is helped by the severe housing shortage in the cities, which will not be alleviated by high levels of new construction for some time to come. Moreover, there is a well-off generation of heirs who definitely have reserves to be able to afford real estate ownership. 

(Photo: © Analogicus, Pixabay)