German property prices are rising again, a study from the Kiel Institute for the World Economy (IfW) said on Thursday.
The research institute said prices for owner-occupied flats, single-family homes and multiple dwelling units in Germany rose in the second quarter of 2024 after falls in the first quarter.
“The trend reversal on the property market has begun,” said IfW researcher Jonas Zdrzalek.
According to Zdrzalek, uncertainty among potential buyers is clearly decreasing, and the prospect of falling interest rates is stabilizing the market.
The slump in new construction is also reducing supply and leading to rising prices, he argued.
Compared to the first three months of the year, prices for owner-occupied flats rose by 2.4% in the second quarter, with single-family homes up 2% and multiple dwelling units by 4.4%.
The figures are based on the Greix property price index, which contains data from 19 cities and the Rhine-Erft district near Cologne.
Greix recorded a price decline of around 14% in the past two years, but the IfW believes that the period of falling German property prices is now likely over.
“The Greix data indicates that the property sector is gaining momentum again and that the market has decided on a direction after volatile months,” said Zdrzalek.
The data also showed that more properties were bought and sold in the second quarter compared to the previous year. Zdrzalek told dpa that transactions were around 10% higher year on year.
Despite the increase, activity on the German property market remains rather low, according to the IfW. Transactions are around 60% of the average from 2019 to 2021, while the figure for new builds is even lower at around 35%.
