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It remains a challenging environment for the German housing market, but rate cuts, economic growth and structural rental market shortages should help the market to bottom out.

The German housing market has suffered from higher inflation and the necessary restrictive response from central banks through high interest rates. But there are now several reasons to expect stabilisation and a turnaround, creating opportunities for investment. This CIO Special examines the price development on the German residential real estate market, including the apartment rental market.

 

Key takeaways:

  • The German real estate market remains a challenging environment. High construction costs and sentiment indicators in the industry continue to bear the hallmarks of recession.
  • However, there are already signs of a bottoming out in real estate valuations. ECB rate cuts, combined with a slight economic recovery in Europe, could provide positive impulses for the real estate market.
  • There are opportunities for investors in the rental market. Supply is likely to remain limited over the coming years, while demand, particularly in metropolitan areas, is likely to remain high.

 

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The CIO Special below is available to download. Please refer to the Important Information at the end of the memo for disclosures and risk warnings.

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