Property price slump – how to make the sale anyway

According to the Federal Statistical Office, property prices in 2023 recorded their sharpest fall 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 property 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 property prices have fallen at all.

Reasons for the fall in prices

The property sector had a crisis-ridden year in 2023, with residential property prices falling by 8.4 per cent. According to the statisticians from Wiesbaden, prices fell by 7.1 per cent in the fourth quarter of 2023 compared to the same period in the previous year and by 2.0 per cent compared to the previous quarter. The property market has been on a downward trend since mid-2022, the peak of a long-standing boom. The expensive metropolises 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 stabilise in the coming year. They expect prices to stagnate and move sideways or only fall slowly. The head of the Association of German Pfandbrief Banks (vdp), Jens Tolckmitt, emphasises: “Housing remains extremely scarce in Germany, especially in metropolitan areas.”

The vdp is therefore forecasting a possible stabilisation of residential property prices from mid-2024, as the biggest uncertainty factors have now been largely eliminated and inflation in particular has stabilised. The inflation rate in Germany was only 2.2 per cent in March 2024. Thanks to the favourable 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 neighbourhoods, now 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 unrenovated buildings or buildings that 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 estate agent can help you to ensure that your property is sold in line with the market and that you make the right decision.

Are you thinking of selling 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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