Are property values on the brink of a trend reversal? In light of recent market changes, many property owners are questioning what the future holds for real estate values. This article analyses the key factors and presents ways to sustainably increase the value of your properties.
Chat with ImmoGPT for free now.
With access to Google, BORIS, and Deep Research.
The topic briefly and concisely
Property values in Germany are developing very differently across regions; metropolitan areas remain expensive, while rural areas exhibit varied trends.
Interest rate trends, construction costs, and demographic changes are key factors influencing future demand and pricing of land.
Sustainability and energy efficiency are becoming increasingly important value drivers for properties, supported by government measures such as the Land Mobilisation Act.
The development of land values in Germany shows a complex dynamic, influenced by interest rate trends, demand, and regional characteristics. While metropolitan areas continue to record high prices, rural areas might experience varied developments. For owners and investors, it is therefore crucial to understand current trends and act proactively. A well-founded property valuation forms the basis for strategic decisions and helps to actively shape the future of your land values. This article highlights the forecasts and provides you with concrete action recommendations.
Market Overview: Analyse Current Land Prices and Short-term Forecasts
The property prices in Germany present a heterogeneous picture. In metropolises like Munich, peak values exceed €2,900/m², while rural regions sometimes fall below €100/m². A nationwide price decrease of about 4% is expected for 2025, with Mecklenburg-Vorpommern and Brandenburg potentially seeing stronger declines. The average land prices stood at approximately 188 euros per square metre in the second quarter of 2023. A thorough market analysis of the trends is essential for your decisions. These figures highlight the need for a nuanced view of the future of property values. Interest rate developments play a crucial role in this context.
Understanding Interest Trends and Construction Costs: Effects on Land Demand
Increased interest rates and high construction costs have dampened the demand for building land. The number of land transactions reached a historic low in 2023, with a decrease of 34% compared to the previous year. The ECB's key interest rate, which rose to 4.5% by September 2023, significantly increased financing costs. However, experts predict that property prices will rise again by two to four percent in 2025, which could also affect land values. The standard land values provide initial indications here. These developments illustrate how external factors shape the future of land values and highlight the importance of forward planning. Another important aspect is demographic change.
Demographic Change: Assessing Long-term Impacts on Regional Property Values
The demographic shift is already affecting property prices today. A study by the RWI shows that the increased proportion of older people has reduced purchase prices for apartments by around 12% between 2008 and 2020. Nevertheless, a consistently high demand for housing is expected until 2060, driven by more single households. Rural areas could be negatively affected, while urban metropolises continue to experience growth. The investment strategies need to take this into account. The differing developments in urban and rural areas are a key factor for the future of land values.
Regional differences in detail:
Urban areas: Persistently high demand, especially in metropolises like Munich (over €2,900/m²) and Hamburg (around €950/m²).
Rural areas: Significantly more moderate prices, sometimes below €100/m² in Thuringia or Saxony.
Population decline: Affects rural regions more, which can lead to vacancies.
Migration to cities: Younger generations prefer urban centres, which supports demand there.
These regional differences illustrate that a general statement on the future of land values is not possible. The specific location remains crucial.
Location, Location, Location: Highlighting Microfactors and Their Importance for Property Value
The location remains the most important factor for property value. Microfactors such as connectivity, infrastructure, and neighbourhood play a crucial role. The average price per square metre for plots in Germany was around 262 euros in Q2 2023, but it varies greatly. In major cities, average prices of €1,029/m² are achieved, while in small communities it's only €92/m². Even within a region, land prices can vary significantly, as shown by the Germany Atlas. A precise analysis of these factors is essential for assessing the future of property values. In addition to location, sustainability aspects are also gaining importance.
Sustainability and energy efficiency: Identifying new value drivers for properties
Sustainability and energy efficiency are increasingly becoming key value drivers. Properties with high energy efficiency are in high demand and command higher prices. Around 75% of all properties have an energy rating of D or lower, indicating a need for renovation. A study by Wüest Partner shows a correlation between CO2 emissions and the market value of residential properties. The consideration of sustainability trends is crucial for the future of land values. The legal framework, such as the Land Development Mobilisation Act, also influences development.
Checklist: Sustainability factors for properties:
Energy efficiency of planned developments (e.g., KfW standards).
Potential for using renewable energy sources (solar potential).
Soil permeability and rainwater management.
Connection to public transport and cycling infrastructure.
Proportion of green spaces and biodiversity potential.
Use of ecological building materials in future developments.
These factors demonstrate how comprehensively sustainability influences the future of property values. Government measures for land development also play a role in this.
Land Mobilization: Understanding State Measures and Their Impact on Supply
The Land Mobilisation Act is intended to help create more building land. It extends municipal pre-emptive rights and building orders to close building gaps more quickly. The aim is to counteract the housing shortage, especially in urban areas. The active property policy of municipalities is seen as an important element of an effective land strategy. The assessment of land potential becomes more complex as a result. These measures can increase the supply of building land and thus influence the future of land values. For owners, it is important to know and correctly assess these developments.
zukunft-grundstuckswerte
The standard land value is an official average value and serves as a guideline. It is determined by appraisal committees, usually every two years. However, the actual property price results from market dynamics and the specific characteristics of the property. For an accurate assessment, an individual appraisal is often necessary, considering all value-influencing factors. A professional valuation by Auctoa or an initial assessment through our ImmoGPT chat can provide you with clarity. Understanding these fundamentals is crucial to correctly assess the future of your property values and identify potential.
Important aspects of valuation:
Location (macro and micro location)
Size and layout of the property
Degree of development
Soil condition and absence of contamination
Buildability (type and extent of use)
Legal conditions (e.g. monument protection)
Current market demand
These factors are incorporated into a well-founded valuation and significantly determine the future of property values. Strategies for increasing value can be derived from this.
Strategies for Increasing Value: Identifying and Utilising Potential for Your Property
What impact does interest rate development have on the future of land values?
Rising interest rates make financing more expensive and can dampen the demand for land, which tends to lead to more stable or slightly decreasing prices. Falling interest rates can drive demand and prices.
Does demographic change play a role in land values?
Yes, demographic changes, such as an ageing population or changing household sizes, influence the demand for housing and thus also affect land values in the long term, particularly varying regionally.
Why are plots more expensive in the city than in the countryside?
In cities, the demand for building land is usually higher due to jobs, infrastructure, and cultural offerings, while the supply is more limited. This drives up prices compared to rural areas.
What is meant by land mobilisation?
Land mobilisation includes measures by municipalities and the state to make more areas available for housing construction, such as activating vacant land or extending pre-emption rights.
How can Auctoa help me assess my land?
Auctoa offers AI-supported property evaluations and strategic consultancy. You receive an objective assessment of your property's current market value and future potential. Use our ImmoGPT for an initial orientation.
Are sustainable plots worth more?
Yes, sustainability aspects such as energy efficiency potential, good connections to public transport, or ecological qualities can positively influence the value of a plot, as demand for future-proof properties increases.
Additional useful links
Statistisches Bundesamt provides data on price indices for residential properties.
Statistisches Bundesamt offers publications on land purchase values.
Deutsche Bundesbank provides an indicator system for the residential property market.
Deutsche Hypo publishes their Real Estate Climate Index, offering insights into market developments.
PwC offers the report "Emerging Trends in Real Estate Europe" featuring current developments in the European real estate market.
Wüest Partner analyses the impact of sustainability on real estate value.
ZIA and EY present a study on digitalisation in the real estate sector.
FAQ
What impact does the interest rate development have on the future of property values?
Rising interest rates make financing more expensive and can dampen demand for land, which generally leads to more stable or slightly declining prices. Falling interest rates can drive demand and prices.
Does demographic change play a role in property values?
Yes, demographic changes, such as an aging population or changing household sizes, influence the demand for housing and consequently also affect property values in the long term, particularly varying by region.
Why are properties in the city more expensive than in the countryside?
In urban areas, the demand for building land is typically higher due to employment opportunities, infrastructure, and cultural offerings, while the supply is more limited. This drives prices up compared to rural regions.
What is meant by land development activation?
Land mobilisation includes measures by municipalities and the state to make more land available for housing construction, e.g., by activating vacant lots or expanding pre-emption rights.
How can Auctoa assist me in valuing my property?
Auctoa offers AI-assisted real estate evaluations and strategic consulting. You receive an objective assessment of the current market value and the future potential of your property. Also, use our ImmoGPT for an initial orientation.
Are sustainable properties worth more?
Yes, sustainability aspects such as energy efficiency potential, good connections to public transport, or ecological qualities can positively influence the value of a property, as the demand for future-proof real estate is increasing.
