The real estate market in Germany has always been one of the most stable and attractive sectors for investment. However, recent years have brought significant changes that cannot be ignored. I want to share with you the key facts about the current situation and trends that could impact your decision to invest in real estate. Economic Situation: What’s Happening? As a financial consultant, I observe that the German economy is going through a challenging time, which directly affects the real estate market. Here are some key factors to consider: 1. Inflation: Today, inflation "eats away" at the purchasing power of many people. In 2023, the rate reached about 6.1%. For those keeping money in savings accounts, this is a real problem as their capital is literally losing value. 2. Interest Rates: The European Central Bank (ECB) raised rates to 4.5% in 2023 to counter inflation. This has made mortgage loans less accessible, especially in large cities where housing prices are already high. 3. Economic Growth: Germany’s economic slowdown creates uncertainty for both buyers and investors, causing many to hesitate rather than act. Key Market Trends I can highlight several key factors shaping the market right now: 1. Falling Housing Prices: According to the Federal Statistical Office (Destatis), housing prices in Q2 2024 fell by 2.6% compared to the same period last year. This is the first significant drop in the last 10 years. The reasons include rising credit costs and cautious buyers. 2. Less New Housing: In 2023, the number of new apartments built was around 294,400, significantly lower than the government target of 400,000. The shortage of new housing remains an acute problem, especially in cities like Berlin, Munich, and Frankfurt. 3. Decreased Transaction Volumes: Real estate turnover decreased by 52% in 2023 compared to 2022, amounting to only €31.7 billion. This indicates that buyers are becoming more cautious, expecting rates to fall. 4. Rising Rental Prices: Despite declining purchase prices, rental prices continue to rise. For example, rents in Munich increased by an average of 6% over the past year. This makes the rental market particularly attractive to investors. What’s Next: My Perspective Many of my clients ask, "Is it worth investing in real estate now?" My answer is: it depends on your goals and opportunities. Forecasts indicate that prices will continue to decline in 2024, but at a slower pace. It is expected that the market will start growing again in 2025-2026, albeit moderately. If you are considering a purchase for long-term investment or passive rental income, now might be a great time to select the right property. My Advice to Investors Real estate has always been and remains a stable asset that protects capital from inflation. If you want to invest in real estate, consider the following: 1. Location: It’s everything, especially in Germany. 2. Financial Opportunities: Calculating your budget is critical now. 3. Long-Term Goals: Real estate investments take time to show their effectiveness.