According to a study, properties with an insufficient energy balance lose value and demand less. Higher costs and upcoming heat exchange laws have resulted in significant price drops.
Apartment buildings with the lowest energy classes G and H were, on average, 28 percent cheaper than particularly energy-efficient properties in the first quarter. That’s the result of an analysis by real estate specialist JLL, which claims to have evaluated 5,000 offer data for the purpose. A year ago, the price difference was 21.6%.
The research shows that the downward momentum picked up again last quarter: compared to the previous quarter, the price discount for the least energy-efficient properties increased significantly by about 3.6 percentage points from 24.5 percent then.
Largest domestic price gap
In detail, according to JLL and Handelsblatt, the average price of apartments and single-family houses in metropolitan centers between the best energy class (A) and the lowest energy class (H) Discount up to 35% field. The gap in densely populated surrounding areas was equally large, at 36%. But disparities are particularly acute in independent small and medium-sized towns and rural areas. According to 45% and 51% of the data, there is a price difference in real estate offers.
While location was previously considered the most decisive factor affecting property prices, energy balance has become increasingly important as energy prices rise and new regulations are introduced. According to JLL, properties with poor energy consumption can expect lower rental income and be less tradable. Meanwhile, the uncertainty has been fueled by debate over plans to replace heating systems. This is reflected in the demand and thus the price of the property.
High interest rates and high construction costs are additional burdens
Regardless, the recent rise in interest rates has put pressure on the market, causing prices to fall in many areas. At the same time, a sharp increase in construction costs led to an increase in energy-related retrofit costs. Real estate finance company Interhyp currently shows an average mortgage rate of 3.9 percent on a ten-year fixed rate.
Uncertainty remains for heating method
The federal government, made up of the Social Democrats, Greens and Liberal Democrats, has yet to adopt future rules for installing new heating systems, adding to uncertainty in the housing market. A draft law by Economy Minister Robert Harbeck (Green Party) stipulates that from 2024 every newly installed heating system should be run by 65% renewable energy.
However, the LDP saw a need for change and posed 77 questions to Harbeck, confirming its concerns. Answers are now available from his department. It is unclear whether the Bundestag will pass the hot transition law before the summer holidays.
After the project was exposed, heat pump sales rose rapidly in the first quarter. According to figures from the Federal Association of the German Heating Industry (BDH) and the Federal Association of Heat Pumps (BWP), it has grown by 110 percent year-on-year. The number of heating heat pumps increased from 43,500 in the first three months of this year to 91,500. In addition, 16,500 heat pumps will generate hot water.
‘Housing Map 2023’ – Prices typically rise long-term
In the long run, however, the real estate market should continue to grow, albeit with very different regional effects. Research also shows this: Deutsche Postbank’s “Housing Atlas 2023” predicts that by 2035, the seven largest German cities, Berlin, Hamburg, Munich, Cologne, Düsseldorf, Frankfurt and Stuttgart, and their surrounding areas and Real prices in other major cities will rise in cities. In Baden-Württemberg, Bavaria, Hessen and Schleswig-Holstein, average purchase prices rose in all regions.
According to the Housing Atlas, apartment prices in almost half of Germany’s regions are likely to actually fall and be at least 2% below current levels by 2035. Rural areas far from big cities in Germany’s eastern states are likely to experience price slumps. Prices are likely to fall slightly or stagnate in many rural areas in Saxony-Anhalt, Thuringia, Saxony, Mecklenburg-West Pomerania and Saarland.