For real estate sellers, the tide is turning. After the shock of 2022, low inflation combined with a shift in interest rates in the financial market is providing more stability and confidence: demand is rising, revenues are stable, and the outlook is positive – even better in Berlin than nationwide.

Together with a steady upswing in the rental market, favorable times seem to be returning. However, sellers should be well-informed about numbers and factors to make better decisions. An open-minded all-around view.

EXECUTIVE SUMMARY

• UPSWING: Demand for real estate is increasing – up to 50% in metropolitan areas
• CONSEQUENCE: Positive trend, the buying market is catching up – to the booming rental market
• RESULT: Berlin prices are stable – the trend shows a slight increase towards a seller’s market
• FACTORS: Easing inflation, shift in interest rates, immigration, housing shortage
• CONCLUSION: Selling is becoming worthwhile again, negotiating even more – best done with professionals

The response of demand to better prospects: Increase!

The downturn was already over in 2023. But now things are slowly picking up again: After the decline in real estate demand in 2022, observers are currently noting a significant trend reversal. In the first quarter of 2024, buying interest has noticeably increased – along with the reduction of the oversupply (by 5% in Q4/2023) and falling mortgage interest rates. Nationwide, there were 30-40% more inquiries, and almost 50% in metropolitan areas.

This development aligns with the positive outlook in the financial market: Loans are becoming more attractive again with falling interest rates. Consequently, for many, the desire for home ownership is coming back into focus. Demand for residential properties in large cities is higher than it has been in two years.

(Source: Auswertung des Angebots bei Immoscout24 im Vergleich zu Januar 2022 und November 2023)

Stable Situation: Germany Comes Out of Reserve

As always, prices will follow the rising demand with some delay. However, the trend is also foreseeable here: revenues from sales are stable – with a slight positive tendency. Over the last twelve months, there has been a nationwide increase in new constructions. However, this trend paused in the first quarter of 2024.

Prices for older houses remained stagnant overall. For existing condominiums, prices initially continued to decline. However, this decline completely stopped in the first quarter of 2024. A good sign – and a reason for optimism.

Berlin: Still Popular – and Far Above Average

Those who own property in Berlin are generally at an advantage. Currently, prices for new constructions in the capital are about 50% above the German average: condominiums average €6,385/m², and single-family homes €6,041/m². Naturally, luxury properties can command even higher amounts.

Existing condominiums are significantly cheaper than new builds; however, Berlin still stands out with €4,564/m², almost double the national average. The same applies to older houses. According to the latest data, the price development of real estate in the capital has been consistently stable for the first time again. Its high value has proven itself.

Good for sellers: rents only go in one direction

A special bonus for the capital: Berlin’s asking rents have risen steadily over the past 20 years – contrary to the purchase price trend in the crisis year of 2022. Developments over the last 12 months now show slight stagnation at a high level in the new-build segment (€19.37/m2) and a further increase in existing rents of 1.9%.

There is no obvious reason to assume that the rental trend could reverse in the medium term. The trend is linked to the demand for housing – and is correspondingly robust. Sellers are also currently benefiting from this. After all, potentially rising rental income provides a relatively good argument against price pressure.

Reason for optimism: interest rate turnaround and stable financial market

There are reasons for the renewed high demand for real estate – primarily financial. With commodity prices stable, inflation has fallen from almost 10 % to 2.4 % by May 2024. It is therefore close to the ideal value – and guarantees that investments remain affordable.

Now there is also no longer any reason for central banks to counter devaluation with high interest rates. The Fed’s key interest rates have been stable for a year now (at 5.5%). And the EZB has just announced a turnaround in interest rates (key interest rate cut from 4.5% to 4.25%). Banks have been forecasting this reduction for some time – and have already turned it into reality: for example, mortgage interest rates for loans over 30 years fell from 4.2 % to 3.7 % by the end of 2023; and even to 3.1% for a term of 10 years.

(Source: Zinsentwicklung Baufinanzierung 2024: Prognose, Chart (drklein.de) )

Housing requirements: Those who want to sell can be bold

Factors that limit the willingness to buy are thus gradually disappearing; its drivers continue to have an effect: with high costs and a lack of skilled workers, residential construction is progressing slowly. And the influx into Berlin continues. There will therefore be no easing on the housing market in the foreseeable future. The shortage remains. Demand is rising. The fall in prices has stopped.

Given the volatile global situation, it is not really possible to predict whether the trend towards a seller’s market will continue. However, there is every indication that it will. At any rate, owners interested in selling are currently in a much more favorable position than a year ago. And the current outlook strengthens their standing.

Good for property: selling with the best for the best

At the apex of the turnaround, you can act with self-confident realism. Take advantage of our expertise – for appropriate proceeds from your property. Because selling is an art that we have mastered for you. Our experts are first-class marketers, exceptional negotiators and provide you with professional and personal support. At David Borck Immobilien Ltd., we do everything for your property. Because our claim is to be the best partner for success.

Let us value your property free of charge now!

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David Borck Immobiliengesellschaft

Schlüterstraße 45 | 10707 Berlin | service@david-borck.de
Phone +49 (0)30 887 742 50 | Fax +49 (0)30 887 742 525