Real Estate News - April 2024

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April 2024

Analysis by Immowelt: Proximity to parks increases property value

A study by Immowelt shows that apartments and detached houses near parks in the 14 largest German cities are up to 16 percent more expensive. The analysis compares the average percentage price premiums for properties less than a 15-minute walk from selected parks with those in the rest of the city. In ten of these major cities, buying a property near urban green spaces is associated with additional costs.

In Munich, buyers who want to live within a 15-minute walk of an urban park can expect to pay an average premium of nine percent. In Frankfurt am Main, properties near city parks are on average eleven percent more expensive. In Bremen, residential properties near parks are 16 percent more expensive on average. In Dresden, residential properties near parks are nine percent more expensive, in Leipzig ten percent.

Surprising at first glance: In Berlin, there is on average no price premium for properties near parks - this could be due to the strongly fluctuating real estate prices in the capital. Also interesting: In Stuttgart, prices for apartments and single-family homes near parks are on average five percent lower, in Düsseldorf even seven percent lower.

Bafin leaves risk buffer at two percent

At the end of March 2024, the German Federal Financial Supervisory Authority (Bafin) decided to leave the sectoral systemic risk buffer for private real estate financing unchanged at two percent of risk-weighted assets. This decision was positively received by the Financial Stability Committee.

Bafin's decision-making was influenced by the analyses and assessments of the Deutsche Bundesbank. The indicator-based analysis showed that despite the current economic weakness of the residential real estate market, significant risks still exist. The analysis focused on the probability of default, loss given default, lending standards and risk provisioning and came to the conclusion that the loss potential in the banking sector has not decreased significantly over the last two years.

Housing market in the capital remains tight

According to a housing market report by Berlin Hyp and real estate service provider CBRE, advertised rents in Berlin rose significantly in 2023. The report, which is based on the evaluation of around 23,300 rental offers, 28,400 purchase offers for condominiums and apartment buildings as well as 220 new construction projects with a total of 34,900 apartments, cites the strong influx and the declining supply of apartments as the main reasons for the increase in rents.

Compared to the previous year, asking rents rose by 18.3% to EUR 13.60 per square meter. The upper rental price segment recorded an increase of 8.7% to EUR 26 per square meter, while the lower rental price segment rose by 4.9% to EUR 6.25 per square meter after a slight decline in the previous year. The price difference between the upper and lower market segments reached almost EUR 20 per square meter at the end of 2023. In particularly sought-after districts such as Kreuzberg and Neukölln, rent increases of around 25 percent were even recorded.

Purchase prices fell by an average of 1.4% across all market segments to EUR 5,750 per square meter, influenced by falling demand due to high interest rates on loans. Price declines were observed in both the upper and lower market segments, by two percent in the upper segment and by 5.4 percent in the lower segment. Despite the declines, the price in the upper segment remained above EUR 10,000 per square meter for the second year in a row. Asking prices for multi-family homes fell by 11.7 percent to 3,179 euros per square meter.

Rent freeze extended until 2029

The rent freeze for new lettings and re-lettings in tight housing markets is to be extended until 2029. Justice Minister Marco Buschmann has announced a corresponding bill. According to the rent freeze, the rent may not be more than ten percent above the local comparative rent when a rental agreement is concluded. The rent freeze, which has been in force for nine years, was actually due to expire at the end of 2025.

Real estate industry associations are critical: they fear that even fewer apartments will be built as a result of the law and that the law could also have a negative impact on the renovation of old residential buildings.

Further readings


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