Real estate prices: VDP index shows a slight increase in the 2nd quarter of 2024

Real estate prices: VDP index shows a slight increase in the 2nd quarter of 2024

Real estate prices in Germany stabilized in the second quarter of this year after they have dropped for almost two years, according to the real estate price index of the Association of German Path Bover Banks (VDP). The index rose by 0.5% compared to the first quarter of 2024, but remained 3.8% in the minus compared to the previous year. The VDP index is based on real real estate transaction data of more than 700 credit institutions and covers the entire German market for residential, office and retail properties. The prices for residential properties increased by 0.5% in the second quarter compared to the previous quarter, but were still 2.9% lower than in the previous year. The prices for commercial properties had dropped by 7.4% compared to the previous year, but rose by 0.4% in the second quarter. The general manager of the VDP, Jens Tolckmitt, explained that the achievable returns now meet the expectations of investors and that a short -term price increase was unlikely. He predicted a sideways movement of the prices for the upcoming quarters due to geopolitical conflicts and maintaining economic development in Germany.

In the area of residential properties, prices for apartment buildings and self -used home ownership increased by 0.5% in the second quarter compared to the previous quarter. The prices for apartment buildings had dropped by 2.8% over the year, while single -family houses and condominiums were 3% cheaper. The new contract rents in apartment buildings rose by 6.1% compared to the previous year and the returns of rental objects increased by 9.2%.

In the seven largest cities in Germany, residential property prices decreased by an average of 2.5% compared to the previous year. However, prices developed inconsistently, with Cologne showing the strongest resistance with a decline of 1.6% and Munich recorded the greatest decline of 4.7%. On a quarterly perspective, prices in the metropolises rose on average by 0.7%.

In the commercial property sector, prices fell by 7.4%in the second quarter compared to the previous year. However, prices could be held on the quarterly view. The returns for office and retail properties rose by 10.9% or 9.6%.

The view for real estate prices is uncertain, but VDP general manager Tolckmitt assumes that prices will continue to tend sideways, whereby residential properties could rise faster than commercial properties. He emphasized the increasing shortage of housing in Germany and the need for political measures to tackle the problem. Despite the uncertainties, Tolckmitt sees a relaxation of the situation on the real estate market.

Source: Association of German Pfandbriefbanken (VDP) e.V./OTS