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23.11.2023

Navigating Changes in German Real Estate: A Shift to Buyer's Market

The German real estate landscape is currently undergoing significant shifts, marked by the cancellation of numerous housing projects and a decline in new orders for developers. These alarming trends, recorded in October 2023, reveal a departure from the robust growth seen in previous years.

 

Cancellations and Decreasing Orders

 

Over 22% of surveyed companies reported the cancellation of housing projects, setting a new anti-record for the industry. Almost half of construction firms, precisely 48.7%, expressed concerns about a lack of orders—a stark contrast to the 18.7% reported in October 2022. Furthermore, data from January to August showed a 28.3% decrease in building permits issued compared to the same period in the previous year.

 

Consequences on the Horizon

 

The repercussions of these developments are widespread. Private owners may find it increasingly challenging to embark on their housing projects. The surge in canceled or prolonged construction initiatives is expected, contributing to potential challenges in the labor market associated with the housing construction sector.

 

Government Measures to Address the Crisis

 

In response to the crisis, the German government is planning interventions aimed at mitigating the challenges faced by the real estate sector. Proposed measures include expediting the process of obtaining construction permits and reducing bureaucratic obstacles to stimulate growth.

 

Shift from Seller's to Buyer's Market

 

These shifts in the real estate landscape mean that developers are less likely to initiate new projects. Simultaneously, prospective homeowners may find favorable conditions as ready-made projects become more available. This transition marks a notable shift from a "seller's market" to a "buyer's market," providing new opportunities for those looking to invest or purchase property.

 

Adapting to Changes

 

As the dynamics of the German real estate market evolve, potential buyers should remain vigilant and consider leveraging this period of transition. Monitoring developments in governmental policies and staying informed about market trends will be crucial for making informed decisions in this changing landscape.

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