Real Estate Prices Rise in Germany: Analysis of European Housing Market Trends

2024-05-02 10:47:50

Real estate price trend reversal in Germany: This is reflected in the AVIV Housing Market Report, an analysis of the real estate markets in seven selected European countries.

In the last quarter of 2023, there was a price drop in three of the seven EU countries examined. Including Germany.

But in the first three months of this year this only applies to France. The price of residential property there fell by 0.5 percent to 3,087 euros per square meter.

► In Germany, real estate prices have risen again: After an increase of 1.6 percent, the average price level is now 2,998 euros per square meter.

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Real estate prices up, interest rates down

The cost of home ownership in France continues to fall, while construction interest rates are developing differently in other eurozone countries. In the first quarter, credit conditions improved significantly in all countries.

► In Germany, real estate financing became 0.4 percent cheaper on average, and loans are again well below the 4.0 percent mark.

► In France, interest rates rose again by 0.1 percentage point. This increase is slowing down the price level of residential real estate in the country.

► Interest rates in southern Europe are falling and real estate prices are rising. In Spain, Portugal and Italy, banks issued lower interest rates for real estate financing.

Germany in third place

In the price comparison between the seven European countries, Germany is in third place with an average price per square meter of 2,998 euros.

► Luxembourg tops the list: Here buyers have to shell out 8,458 euros per square meter. Demand for capital is high, so the average price is high.

But France is more comparable to Germany because of its size. Here, real estate buyers must expect an average of 3,087 euros per square meter. Despite the price drop, still slightly more than in Germany.

► In comparison, buying a property in Italy is the cheapest. On average, you pay an average of 1,850 euros to live there.

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Real estate financing is booming in Germany

According to the European Central Bank (ECB), significantly more real estate loans have been granted in recent months than in 2023. In January, 15 percent more construction financing was granted than in the month same of the previous year. In February it was even 18 percent more.

To compare: the situation is different in France. In January of this year, 40 percent less construction funding was granted than the previous year. In February 37 percent less. In the neighboring country it is clear that high interest rates are delaying the granting of loans.