In 2023, however, existing urban properties in need of refurbishment or with a poor energy balance will also continue to fall in price. The high cost of energy is putting pressure on demand and thus on the price. Price declines in the double-digit percentage range are realistic, whereas rents will continue to rise.
Thanks to rising mortgage rates and high construction costs, the number of new construction projects is declining rapidly, with the result that fewer and fewer people are buying property and instead renting. The result: higher rents in 2023, at the same time falling prices for property. Nevertheless, a real estate bubble is unlikely to burst in Germany; unlike in Spain or the UK, many buyers have been able to secure low interest rates for 10 to 15 years.
However, the housing shortage continues to grow. Cost-covering rents for new buildings are becoming unaffordable for many, as they are already often over 20 euros per square meter. This slump in demand is putting the brakes on new residential construction. Construction companies were already affected by many cancellations in 2022. In November 2022, 16.7% of construction firms canceled their projects, compared to 14.5% in October.
Should you buy now or wait and see?
Property prices will decline less sharply, especially in popular locations. At the same time, construction interest rates are expected to rise slightly. At the beginning of 2023, the conditions for ten-year loans are around 3.9%. In the course of the year, these may rise slightly to over four percent. So those who wait will probably not be able to count on noticeably lower costs.