Real estate prices: Will 2024 see a turnaround?
3 min.
For years, real estate prices have only gone in one direction: upwards. However, a recent analysis by Deutsche Bank predicts that the boom will come to an end in 2024. Will there be a drop in the value of real estate from then on?
Residential real estate prices have risen by an average of just over half in recent decades. In metropolitan regions, the price increase has been even more pronounced in some cases. Even the coronavirus pandemic has not halted this trend - even if there was a brief dip in price increases.
Why should the trend end in 2024?
Deutsche Bank has come to the conclusion that real estate prices could fall from 2024. This phase is expected to last for around three years and property prices will fall by around five percent. The bank does not expect a crash on the real estate markets. Deutsche Bank believes that one reason for the trend reversal is that the extremely tight supply of residential real estate should ease by 2024. This is because many new buildings will have been completed by then. In addition, population growth is slowing down.
Another possible reason is an increase in the key interest rate. The long-lasting low interest rates have contributed to the rise in real estate prices. On the one hand, it has created favorable financing conditions for owner-occupiers and investors. On the other hand, it has made other investment opportunities less attractive, which has only increased the focus on real estate. Now, however, rising inflation worldwide could prompt central banks to end their low interest rate policy. If loans become more expensive, this could lead to more properties having to be sold because the loans may no longer be able to be serviced.
What speaks against Deutsche Bank's result?
Other research institutes such as the digital financing platform Europace, on the other hand, do not see any significant changes in the factors driving high real estate prices, such as longer life expectancy, more single households, net migration to Germany and low new construction activity.
A comparison of current analyses with forecasts from previous years reveals that the really decisive triggers for economic developments or crises are almost never predicted accurately.
Owners should therefore not be unsettled by overly generalized forecasts. Instead, it is advisable to rely on the expertise and many years of experience of a quality local estate agent. They deal with the real estate market in their region on a daily basis and are very familiar with developments. They will advise you on the best time to sell your property.
Would you like to know when it is worth selling your property? Get in touch with us! We will be happy to advise you.
Further information can be found here:
https://www.asscompact.de/nachrichten/endet-der-deutsche-immobilienboom-im-jahr-2024
https://www.n-tv.de/wirtschaft/Deutsche-Bank-Hauspreise-duerften-ab-2024-sinken-article22409901.html
Photo: © nupix/Depositphotos.com
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