Felix Mildner

January 18, 2024, 4:03 pm | Read time: 4 minutes

myHOMEBOOK: Will real estate prices go up or down in 2024?
Christopher Hnida: “I don’t think it’s foreseeable that real estate prices will go down in 2024. Quite the opposite: The uncertainty caused by the changed interest rate situation in 2023, which significantly shaped the first half of the year, is decreasing. People have gotten used to this interest rate level, and the market has adjusted to some extent.”

In what way?
“Prices have developed somewhat downward. Additionally, owners now know they need to be more willing to negotiate if they really want to sell. More activities are taking place again, more transactions, and volumes are increasing. Therefore, I expect a positive to sideways forecast for 2024 regarding real estate prices. I think it will remain relatively stable at the level we are at now.”

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»Building is expensive – and that will likely remain the case this year

We’ve talked about purchase prices. What are the developments in home construction?
“Demand here decreased somewhat last year, also due to the interest rate development and the associated uncertainty. It may carry over into this year. I rather doubt it, as the market is becoming more active again. And I don’t expect construction prices to change significantly this year. It’s relatively expensive to build – and that will likely remain the case this year.”

Ultimately, real estate prices also indirectly affect rental prices. What can be expected here in 2024?
“The rental market benefited greatly last year from the development and caution in buying real estate. People who theoretically would have bought chose to rent instead, as they were unsure if buying was the right option. For the first time in many years, renting meant the same monthly burden – if not less – as buying. And this clearly strengthened the rental market.”

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How does this affect the market?
“The already very high demand has increased massively. This phenomenon is now subsiding somewhat, as more activity is taking place in purchases again. Nevertheless, metropolitan areas in Germany remain hot markets, and the demand for residential real estate remains high. There will be no significant change in 2024. It will continue to be difficult to find a nice rental apartment in Berlin, Hamburg, or Munich.”

»The time for waiting and watching is over

What advice can be given to people interested in buying real estate in 2024?
“I think the time for waiting and watching is over. The numbers also support this regarding transactions. I would advise looking around now and – if it’s the right property – really going for it. You can also take advantage of the fact that sellers are usually more willing to negotiate than they have been in recent years. Therefore, as a buyer, you now have a stronger position. But fundamentally, now is the time to be active, to take care of things, and not to wait any longer.”

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What political actions are needed to improve the real estate market?
“Unfortunately, the homeownership rate in Germany, at about 43 percent according to the Federal Statistical Office, is still far below the European average of 69 percent. In Berlin, only 15 percent of people own homes. Especially considering the dilapidated pension system, this should be enough of an alarm signal to finally ensure politically that more people can fulfill their dream of owning a home. There are many possibilities. Reducing or suspending the real estate transfer tax for young families, further KfW funding programs, or subsidies for savings models would be sensible and desirable measures. However, given the political priorities and the difficult budget situation, such measures are not expected in the coming year.”

Christopher Hnida regularly writes for myHOMEBOOK about real estate buying, selling, and financing.