The real estate market has taken an unexpected turn since 2022: Property prices have experienced a historic slump. Economic institutes are therefore monitoring current developments very closely. First rays of hope.
Residential property prices fell more sharply in 2023 than at any time since the surveyor committees began collecting purchase prices in the 1960s. The Federal Statistical Office, the Cologne Institute for Economic Research (IW Köln) and the Kiel Institute for the World Economy (IfW Kiel) document the figures and draw conclusions.
According to the Federal Statistical Office, residential property prices (house price index) in Germany rose by an average of 1.9% in the fourth quarter of 2024 compared to the fourth quarter of 2023 and by 0.3% compared to the previous quarter. Only in sparsely populated rural districts did prices continue to fall compared to the same quarter of the previous year.
The 2024 annual analysis by GREIX (IfW Kiel) shows: Sales prices for condominiums, single and multi-family homes fell again in 2024 compared to the previous year. This was due to the sustained fall in prices in the first quarter. Although a recovery set in after that, it was not sufficient to draw a positive balance for the year. Condominiums traded 1.5 percent lower than in 2023, with single-family homes 1.6 percent and multi-family homes 3.0 percent lower than in the previous year. "The German real estate market has left the absolute lows since the slump behind for the time being," says Jonas Zdrzalek, real estate expert at IfW Kiel.
The ZIA-IW Real Estate Sentiment Index (ISI, IW Cologne) measures sentiment in the real estate industry: in the first quarter of 2025, sentiment is roughly on a par with the previous quarter. The business situation is rated at 11.1, which corresponds to a drop of 6.9 points compared to the previous quarter. By contrast, expectations improved by 6.9 points to a value of 21.7. Overall, companies expect the situation to improve over the next twelve months.
Conclusion: If you are currently planning to sell a property, you should commission real estate specialists in your region to carry out a sales appraisal.
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