Buying property: are bargains available again?

The rise in financing interest rates on high property prices coincided with the interest rate shock. For many, buying property last year became difficult due to unaffordable prices. As a result, property sellers had to adjust their asking prices, which led to a fall in property prices. However, initial signs indicate that this trend could soon be reversed.

Falling inflation – falling interest rates?

Inflation has fallen from over 6 per cent in the summer of 2023 to 3.2 per cent in November 2023. Investors are now speculating that the European Central Bank (ECB) will cut interest rates as early as this spring, which will have an impact on mortgage rates. Last December, the interest rate on ten-year German government bonds fell below two per cent for the first time in a year. Building interest rates also fell, meaning that a ten-year loan fell from over 4 per cent to around 3.5 per cent. According to financing experts, the current situation offers considerable financial relief for property buyers.

Low prices – high prices

According to the Federal Statistical Office, property prices fell by an average of 10.2 per cent between July and September 2023. However, it is important to note that developments on the various property markets in Germany have varied. While prices fell sharply in some regions, they were hardly or only slightly affected elsewhere. It is therefore advisable to consult a local quality estate agent to understand the property market situation in your region.

However, a fall in interest rates could lead to an increase in demand for property, which usually results in rising prices. The current low level of construction activity is contributing to a continued shortage of property supply. Some property analysts are predicting that property prices will rise again by the end of 2024 or 2025 at the latest. This means that the window of opportunity for buying property could soon be closed again.

Good opportunities for price negotiations now

In the current situation, the chances of price negotiations for prospective buyers are better than they have been for a long time. Property experts advise talking openly about your own financing limits. Negotiating prices and explaining financing options are typical tasks of a professional estate agent. It is advisable to seek the support of such an expert. Take advantage of the current combination of a favourable negotiating position for buyers and falling construction interest rates before the situation changes.

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Note

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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