FRANKFURT (dpa-AFX) - After more than twelve years of real estate boom in Germany, experts expect prices to continue falling, but not to collapse. Instead, rents are likely to rise more strongly again. Price declines can be observed above all in properties in poor locations or with high energy consumption, says Michael Voigtländer, real estate expert at the Institute of the German Economy (IW). "I don't see as much potential for correction in the case of high or decent energy balance."

Increased lending rates, high construction prices and record inflation are making home ownership less affordable. Demand will shift partly to the rental market "and increase upward pressure on rents there," a Landesbank Helaba study said. After a phase with relatively low markups, new contract rents recently picked up again more strongly with growth of five percent, observed DZ Bank. The rising immigration also with the refugees from the Ukraine increases the housing demand.

Voigtländer believes it is conceivable that a trend that has lasted for years is turning around. "It is possible that we are now entering a phase in which rents are growing faster than prices." Supply rents already rose 5.8 percent in the third quarter compared with the same period last year, according to IW data.

Above all, interest rates on loans, which have more than tripled within a year, are dampening demand for real estate. The German Institute for Economic Research (DIW) believes that purchase prices could fall by up to ten percent in 2023. According to the Federal Statistical Office, prices for residential real estate already fell by an average of 0.4 percent in the third quarter of 2022 compared with the previous quarter./als/DP/zb