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07.11.2024 09:06

GREIX Q3 2024—Recovery in real estate prices confirmed, new build apartments near all-time high

Mathias Rauck Kommunikation
Kiel Institut für Weltwirtschaft

The recovery of the German real estate market has continued in the third quarter of 2024. Prices for apartments and single-family homes rose compared to the previous quarter (Q2 2024), even year-on-year they saw a moderate plus. A comparison by year of construction shows that prices for newly built apartments are already close to their peak again. This is shown by the latest update of the German Real Estate Index (GREIX), a joint project of the local expert committees (Gutachterausschüsse für Grundstückswerte (GAAs)), ECONtribute, and the Kiel Institute. (...)

(...) The transaction databases of the GAAs, which contain notarized sales prices, are evaluated according to the latest scientific standards. All data for currently 20 cities and regions including their neighborhoods are freely available at www.greix.de (https://www.greix.de/).

"The German housing market confirms the signals from the previous quarter that purchase prices for private residential property have bottomed out after the recent, drastic crash and are now picking up again," says Jonas Zdrzalek, real estate expert at the Kiel Institute for the World Economy. "However, the momentum is still somewhat subdued, and there are no signs of a new boom at the moment."

Compared to the previous quarter (Q3 2024 vs. Q2 2024), prices for apartments rose by 1.4 percent. Single-family homes increased by 1.3 percent. In contrast, the value of multi-family houses fell slightly by 0.4 percent, although prices had risen sharply by 4.4 percent in the previous quarter. However, there is a high degree of volatility in this segment due to the low number of transactions, and thus the informational value is limited.

As in the previous quarter, the overall price trend was above the current inflation rates.

For the first time since the downturn about two years ago, prices are also rising on a year-on-year basis. Compared to the same quarter a year ago (Q3 2024 vs. Q3 2023), apartments became 0.9 percent more expensive, single-family homes recorded a neutral result (+0.1 percent), and multi-family homes declined in value by 2.8 percent. However, the rate of decline has been steadily shrinking compared to previous quarters, which is another sign of a turnaround in the housing market.

The number of real estate transactions increased again, though it remains noticeably below the levels seen during the boom years, at around 75 percent of the average from 2019 to 2021. The share of new constructions within these transactions also declined, from approximately 20 percent during the boom years to just 10 percent.

Top 7 cities

In Germany's 7 largest cities (Berlin, Düsseldorf, Frankfurt am Main, Hamburg, Cologne, Munich, Stuttgart), there was an overall sideways movement compared to the previous quarter Q2 2024 with slight upward and downward swings.

Cologne (+1.1 percent) and Stuttgart (+1.0 percent) recorded the strongest increase, while Hamburg saw the sharpest decline (-0.7 percent). Prices in Düsseldorf (+0.2 percent) moved sideways, as did those in Frankfurt (-0.4 percent), where they had already risen significantly in the previous quarter (Q2 2024 vs. Q1 2024).

Note: No data is available for Berlin and Munich for Q3 2024 in this GREIX update.

New buildings only 1.5 percent below peak level

Newly built apartments in Germany’s top 7 cities have shown particularly strong value stability. Prices have nearly returned to their peak levels from 2022, with values in the third quarter of 2024 only 1.5 percent below that high. Overall, during the recent significant price drop in the real estate market, values fell by only about 6 percent.

For existing apartments in Germany's 7 largest cities, the price decline was much more pronounced at around 16 percent. In the current update, prices for both classic old buildings constructed before 1950 and apartments from the post-war years to the present are still around 10 percent below their highs.

Other cities

Outside the top 7 cities, quarterly price trends for apartments are more uniform than in metropolitan areas. The trend is upward for nearly all cities; however, the market remains more volatile overall, with stronger price fluctuations likely due to the lower number of transactions.

Leipzig saw a particularly sharp price increase (+7 percent). Duisburg (+6.3 percent) and Potsdam (+5.3 percent) also experienced significant growth, with both cities showing potential for catching up after declines in the first half of the year. Only in Dortmund did prices fall, by 2.2 percent.

"Overall, the relatively low numbers of transactions hints that many market participants are still taking a wait-and-see approach," says Zdrzalek. "However, it's quite conceivable that more buyers will return to the market now, as property prices haven’t been this low for almost four years, and a turnaround is underway. New constructions appear to be in very high demand, with limited supply being reflected in the prices."

Read full report now: GREIX Q3 2024 (https://www.ifw-kiel.de/publications/greix-q3-2024-recovery-in-real-estate-price...)


Methodological note
The price development of the GREIX is calculated as an index. This is the only way to use statistical methods (hedonic method) to eliminate distortions that would otherwise occur with average prices per square meter. For example, the sale of a particularly large number of high-priced properties, for example due to a high number of square meters, good location, or good condition, leads to rising average prices per square meter, but such an increase is not based on a general increase in the value of properties. The formation of the index means that there is no upward or downward distortion in the price trend due to specific characteristics of the properties sold.

About the GREIX:

• What is the GREIX?
The GREIX is a real estate price index for Germany based on the sales price collection of the local expert committees, which contains notarized sales prices. It tracks the price development of individual cities and neighborhoods back to 1960 and is based on more than two million transaction data. The dataset can be used to analyze long-term trends in the real estate markets and to place current developments in a historical context.

• What data and methods are used to create the indices?
The data collection and evaluation take place in cooperation with the local expert committees. All real estate transactions are recorded in full. The price development is calculated according to the latest scientific standards and statistical methods (hedonic regression method). The GREIX thus stands for the highest scientific data quality.

• Who finances the GREIX?
GREIX is financed by public funding and is a project of the Bonn-Cologne Cluster of Excellence ECONtribute, which is funded by the DFG, and the Kiel Institute for the World Economy, in cooperation with the local expert committees. Its aim is to increase price transparency in the real estate market. Different price indices for 20 cities and regions are freely accessible at www.greix.de (https://www.greix.de/). Additional cities will gradually be added to the data set.

Media Contact:
Mathias Rauck
Chief Communications Officer
T +49 431 8814-411
mathias.rauck@ifw-kiel.de

Kiel Institute for the World Economy
Kiellinie 66 | 24105 Kiel | Germany
Chausseestraße 111 | 10115 Berlin | Germany
T +49 431 8814-1
E info@ifw-kiel.de
www.ifw-kiel.de

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Wissenschaftliche Ansprechpartner:

Jonas Zdrzalek
Kiel Institute Researcher
+49 160 98272770
jonas.zdrzalek@ifw-kiel.de

Steffen Zetzmann
Kiel Institute Researcher
steffen.zetzmann@ifw-kiel.de

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Price Development Market Segments

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Price Development Apartments

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Anhang

Price Development Apartments by Construction Year

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