German house prices are rising again, according to a study by the Kiel Institute for the World Economy (IfW) published on Thursday.
According to the research institute, prices for apartments, single-family homes and multi-family homes in Germany rose in the second quarter of 2024, after a decline in the first quarter.
“The trend reversal in the real estate market has begun,” said Jonas Zdrzalek, researcher at IfW.
According to Zdrzalek, uncertainty among potential buyers is clearly decreasing and the prospect of falling interest rates is stabilizing the market.
The decline in new construction also means that supply is decreasing and prices are rising, he argued.
Compared to the first three months of the year, prices for owner-occupied apartments rose by 2.4% in the second quarter, those for single-family homes by 2% and those for multi-family homes by 4.4%.
The figures are based on the Greix real estate price index, which contains data from 19 cities and the Rhine-Erft area near Cologne.
Greix has recorded a price decline of around 14% over the past two years, but the IfW expects the period of falling German property prices to now probably be over.
“The Greix data indicates that the real estate sector is regaining strength and that the market has chosen a direction after months of volatile developments,” Zdrzalek said.
The data also showed that more properties were bought and sold in the second quarter than the year before. Zdrzalek told dpa that transactions were about 10% higher than a year earlier.
Despite the increase, activity in the German real estate market remains quite low, according to the IfW. Transactions are around 60% of the average from 2019 to 2021, while the figure for new construction is even lower, around 35%.
