The real estate market in Germany is witnessing a notable shift as construction interest rates begin to decline, providing a glimmer of hope for potential homebuyers. According to an analysis by Immowelt, the monthly annuity for home purchases is only slightly higher than at the beginning of 2025, despite the fluctuations in interest rates.
In March 2025, construction interest rates unexpectedly climbed to 3.73 percent, prompting concerns among buyers. However, due to changes in international financial dynamics, particularly the United States' tariff policies leading to a lack of confidence in US government bonds, the Euro has emerged as a safer investment. This shift has resulted in increased demand for European bonds, which in turn has lowered yields and construction interest rates to an average of 3.59 percent.
At the start of January 2025, buyers could expect a rate of 3.16 percent. The current rate, while still higher than earlier this year, represents a significant decrease from the peak of 4.23 percent in 2023. For many prospective buyers, this means a reduction in monthly payments. In fact, according to Immowelt, buyers are currently paying up to 181 euros less per month compared to when rates peaked.
In 48 out of 80 major German cities, the increase in monthly financial burden due to rising interest rates has been modest, often less than 50 euros. For instance, in Chemnitz, the increase is only 21 euros per month, while Salzgitter sees an increase of 23 euros. Gelsenkirchen and Bremerhaven have similarly low increases at 25 euros each. This situation allows buyers in these cities to secure homes without significant financial strain.
In Moers, where the average price for a 75-square-meter existing apartment is currently 178,000 euros, buyers are facing a monthly payment of 647 euros at the current interest rate of 3.59 percent. This figure is 34 euros more than at the beginning of January but 52 euros less than in November 2023. The analysis assumes a 10-year fixed interest rate and takes into account a 20 percent equity contribution with amortization over 30 years.
Despite the slight increase in monthly payments, the overall attractiveness of purchasing property is on the rise. Marco Persicke, managing director of KSK-Immobilien, noted that the real estate market in the Rhein-Erft-Kreis is experiencing a resurgence. He reported that since early 2024, there has been a marked increase in demand and sales, as many tenants are considering buying due to the ongoing rise in rental prices, which have increased by 5.1 percent for existing apartments.
Factors such as decreased construction interest rates and inflation, along with rising real wages, are contributing to this trend. However, finding affordable properties remains a challenge for many. New rental contracts for existing apartments are particularly high in Hürth, where prices reach 12.26 euros per square meter, followed by Pulheim at 11.81 euros and Frechen at 11.72 euros. In contrast, rents are significantly lower in Elsdorf at 8.86 euros and Bedburg at 9.48 euros.
Detached houses in the Rhein-Erft-Kreis are currently available for an average price of around 607,000 euros. For new apartments, the average price per square meter was 5,123 euros last year, with Hürth showing particularly high prices at 5,842 euros per square meter, while Bergheim offers lower prices at 4,681 euros per square meter.
As the real estate market continues to evolve, potential homebuyers are left weighing their options: is now the right time to buy, or should they wait for even lower prices? Many experts suggest that those who purchased properties during the peak of interest rates in 2023 are now facing monthly payments that exceed 100 euros more than they would today.
As the market stabilizes, buyers with sufficient equity may find it advantageous to act sooner rather than later, especially in cities where prices remain relatively low. The current economic climate, characterized by fluctuating interest rates and rising real wages, presents a unique opportunity for many households looking to invest in property.
In summary, the recent trends in construction interest rates and the overall real estate market indicate a cautious optimism for buyers. As prices for existing apartments have decreased slightly on average, and the monthly burden remains manageable, many are considering taking the plunge into homeownership. With the right timing and financial planning, potential buyers may find themselves in a favorable position to secure their dream home.
