Real estate price slump - how to still sell successfully

According to the Federal Statistical Office in 2023, real estate prices recorded their sharpest decline since 2000. What should you as a seller expect now and what should you pay particular attention to when selling your property?

The fall in real estate prices is probably the sharpest year-on-year and even since the start of the new millennium. This is the first time since 2007 that real estate prices have fallen at all.

Reasons for the fall in prices

The real estate sector had a crisis-ridden year in 2023, with residential property prices falling by 8.4%. According to the statisticians from Wiesbaden, prices fell by 7.1% in the fourth quarter of 2023 compared to the same period of the previous year and by 2.0% compared to the previous quarter. The real estate market has been on a downward trend since mid-2022, the peak of a long-standing boom. The expensive metropolitan areas in Germany have been particularly hard hit.

The reason for the falling prices was the significant rise in interest rates, which also made loans considerably more expensive. This in turn meant that many people could no longer afford to buy property and major investors no longer considered investments to be profitable. At the same time, demand for housing remains high, particularly in cities, while new construction is in crisis due to the rise in interest rates and expensive materials.

Hope for a turnaround in interest rates: End of the downward trend in summer?

Nevertheless, some experts expect prices on the property market to stabilize in the coming year. They expect prices to stagnate and move sideways or fall only slowly. The head of the Association of German Pfandbrief Banks (vdp), Jens Tolckmitt, emphasizes: "Housing remains extremely scarce in Germany, especially in metropolitan areas."

The Vdp is forecasting a possible stabilization of residential property prices from mid-2024, as the biggest uncertainty factors have now been largely eliminated and inflation in particular has stabilized. The inflation rate in Germany was only 2.2 percent in March 2024. Thanks to the favorable inflation trend, an interest rate cut by the European Central Bank in June is even conceivable.

Why now is the right time to sell a property

If you own property in less sought-after areas such as rural regions or unattractive urban districts, it is still a good time to sell. However, you should bear in mind that the price must not be overpriced. Sellers should now be prepared to lower their asking prices a little and adjust them to market conditions. Owners of buildings that have not been renovated or are not up to date in terms of energy efficiency can also benefit from a sale now. A sale can often be a cost-effective alternative to renovation and still offer attractive returns.

An experienced real estate agent can help you to ensure that your property is sold in line with the market and that you make the right decision.

Do you intend to sell your property or residential property? Do not hesitate to contact us. We will be happy to advise you.

Notes

For reasons of better readability, the generic masculine is used in this text. Female and other gender identities are explicitly included where this is necessary for the statement.

Legal notice: This article does not constitute tax or legal advice in individual cases. Please consult a lawyer and/or tax advisor to clarify the facts of your specific individual case.

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