The 5% study by BulwienGesa shows as of June 30: The basic situation of the housing market in Germany has not changed much in the first half of 2024. The latest construction completion figures show that the government's targets of around 400,000 completions were not achieved. In 2024, a maximum of 250,000 apartments are expected to be completed. The new construction market continues to be shaped by past and new insolvencies in combination with project postponements. The shift of a large part of the demand from the purchase market to the rental market further exacerbates the situation.
Transaction activity on the residential real estate market has almost come to a standstill in recent years due to the development of interest rates. From this point on, the high factors of the past belonged to it. At the end of 2023, significantly lower purchase price factors were called than in the previous year: In the Class A cities, an average of eight fewer annual rents were paid. In the B and C cities, the decline was about four to five factors at an originally significantly lower starting level.
In 2024, there will again be slight downward corrections. However, the jumps are no longer quite as big, which gives hope that the bottom has been reached.
The assumptions of the forecasts also speak in favour of reaching the bottom. Stable inflation and a further decline in interest rates should breathe life back into the market, especially if it improves financing conditions, which has been the biggest obstacle to many investors' decisions so far. However, the challenges for the housing market due to the energy-efficient adjustment of the stock will remain, so that prices will continue to differentiate.
The advantage of the residential segment in the form of stable cash flows that are independent of economic fluctuations should continue to be a fundamental attraction for investors in the future – a major advantage over the commercial asset classes.
