The German real estate market showed largely stable price development in July. According to the Europace House Price Index (EPX), the overall index rose moderately by 0.19% to 222.22 points in July. Compared to the same month last year, this represents a plus of 1.44%, which underlines the continued stability of the market. However, a differentiated look at the segments reveals varying dynamics.
In the condominium segment, price development in July remained almost unchanged with a slight decrease of 0.03% to 219.54 points. Year-on-year, prices here are still 0.16% above the previous year's level, indicating largely stagnation. Prices for new detached and semi-detached houses also remained at a high level, with a slight decrease of 0.20% to 244.07 points in July. However, there is still a significant increase of 2.34% year-on-year.
Significant price increases for existing properties
In contrast, a pronounced upward trend manifested itself in existing detached and semi-detached houses. After sideways movement in June, prices in this segment rose by 0.89% to 203.04 points in July. The price momentum also intensified year-on-year, with an increase of 1.79% compared to the previous year's level. Stefan Münter, Board Member and Co-CEO of Europace, stated that the owner-occupied housing market had stabilised, but that the recovery was likely to be slower than previously assumed. He attributed this to weak overall economic momentum and a lack of income impulses, which are slowing the shift from the rental to the owner-occupied market and requiring a longer alignment of price expectations between buyers and sellers.
Mr Münter described the development of existing detached and semi-detached houses in July as striking, but conceded that it was too early to assume a new trend, as some of it could be seasonal. He pointed out that since the beginning of the year, existing houses have been catching up with condominiums. This could indicate that, given higher financing costs, buyers are increasingly evaluating the relationship between price and living space, and houses in suburban areas are becoming more attractive. The sustainable establishment of this shift will become apparent in the coming months.
Asking prices and the rental market
Analysis by VALUE AG also confirms a differentiated picture of asking prices. While asking prices for detached and semi-detached houses rose again in July, condominiums again fell slightly. The median asking price for detached and semi-detached houses nationwide was EUR 2,662 per square metre, an increase of 0.18% compared to the previous month. This segment has shown a continuous increase since April; year-on-year, the increase is 2.4%.
For condominiums, a median of EUR 3,564 per square metre was determined, which corresponds to a decrease of 0.22% compared to June, after a previous decrease of 0.33%. The annual rate has thus flattened to +1.3%, after being around five percent at the beginning of the year. In contrast, the rental market remained tight. Asking rents rose by 0.51% to EUR 9.78 per square metre (net cold) in July. Year-on-year, this corresponds to a significant increase of 3.7%, which exceeds the gains in the purchase segments.
Sebastian Hein, Director at VALUE AG, commented that asking and transaction sides were in sync in July, and both metrics indicate a differentiation between owner-occupied homes and apartments. The exact cause of this development is still unclear. He noted that owner-occupier demand in the apartment segment remains robust, with owner-occupied capable apartments being 2.5% above the previous year. The investment segment, however, is stagnating. The strong rental development supports this observed differentiation.
