#The real estate market is experiencing a decline, and property prices have decreased by 2.1%.

To restore balance in the real estate market, property prices need to fall, and we are gradually approaching this goal. So far, prices in metropolitan areas have dropped by approximately 2.1%, especially for condominiums and houses. The price development in the first quarter of 2023 shows a significantly lower price level compared to the year 2022. This can be attributed to inflation and interest rate hikes compared to the previous year 2022. Prices were artificially driven up by various seller groups, often exceeding the actual value of the properties. In some cases, prices were even so high that banks rejected financing. In order to enable tenants to purchase properties, prices need to fall much more significantly than just by 2.1%.

#Summary report KI - Kreth real estate media 06/2023

#Nationwide funding programs in 2023 for families planning to purchase property or renovate/upgrade existing properties

In June 2023, a new funding program will be introduced for private customers who are planning to transition into homeownership or modernize their properties. Attention, dear families, you can now fulfill your dream of owning a home once again. Due to the increase in interest rates, some families were unable to afford their own homes. Overpriced properties, inflation, and ultimately, loan interest rates dashed this dream. But now, the motto is: Into the dream house! Various funding programs from different federal states enable the purchase of a property, new construction, or renovation of existing properties.

Funding program for families: What income limits apply to the new funding program, which is expected to come into effect in June 2023? Families with an income below €60,000 are eligible. The amount increases by €10,000 for each additional child. The federal government has allocated €350 million for this purpose!

Some federal states even offer additional special loans, such as the "Living with Children" program. To qualify for this application, the requirement is that a minor child (under 18 years old) resides in the household, and the maximum annual income for couples is €200,000, while single parents may have an income of up to €100,000 per year.

You can obtain information from the state bank regarding this. The additional funding "Energy Efficiency" provided by the state supports modernization measures on your property, which have received additional funding of 3% per year and a repayment subsidy of 3% after the Z-15 funding in recent years. Renovation funds can be granted up to €120,000 for each residential unit or supported with a loan of up to €50,000. You can definitely obtain information about this from the Bavarian State Ministry of Housing, for example, for Bavaria. Further research is necessary to find out which federal states participate in these measures. It is currently known that Baden-Württemberg is participating.

The subsidized loan of the new program in Berlin aims to provide financial assistance to couples and single parents for purchasing properties. It is designed to help potential buyers with low or moderate income. The loan amount ranges from €10,000 to €40,000, with a maximum term of 30 years (with the first 20 years being interest-free). Additionally, parents receive an additional €10,000 per child.

For the energy subsidy program "IBB Residential Renovation" in Berlin, a loan of up to €100,000 is available for property modernization. The "ENEO" Energy Consultation program offered by KfW includes an assessment for sustainable and energy-efficient housing.

For further information, please contact the Investitionsbank Berlin.

Hamburg focuses on families and provides new subsidized loans for families with 3 or 4 children, as well as additional disabilities (with a severe disability of at least 80%). The requirements for the subsidy program include the purchase of new properties or the initial occupancy of a property, and the beneficiaries must live in the subsidized property for at least 15 years. There are income limits that must be considered.

In Lower Saxony, the construction or purchase of a property, as well as the modernization of existing properties for owner-occupancy, is subsidized. Interest-free loans with a term of 15 years and a loan amount of up to €50,000 are offered. An additional €5,000 is provided for each additional child or for individuals with disabilities. Grants of €2,000 are also available. These subsidy measures fall under the category of "Social Housing Subsidy Programs" and also apply to renovations.

For more information, please contact the Investitions- und Förderbank Niedersachsen.

You can find more subsidy programs for each federal state on the internet: Baden-Württemberg, Berlin, Bavaria, Lower Saxony, Hesse, Brandenburg, North Rhine-Westphalia, Rhineland-Palatinate, Saarland, Saxony, Schleswig-Holstein (Investitionsbank Schleswig-Holstein), and Thuringia.

#Summary report KI - Kreth real estate media 06/2023

#Developments in the residential and commercial real estate market - financing

Due to the interest rate hike in October 2022, the residential real estate market is experiencing a decline, and the effects of the interest rate hike are already being felt. In order to make affordable housing possible, prices will have to fall. With rising property prices, interest rates, and inflation, it will be increasingly difficult to make the transition from renting to homeownership.

As a result, banks in the residential sector have already seen a decline of approximately 49.2% in financing, amounting to 16.3 billion euros. This is a significant decrease compared to the previous year, which saw a record amount of 32 billion euros. The balance between property value and purchase price needs to be restored as quickly as possible, as the increased interest rate makes it more challenging for private customers to afford property purchases. Property owners' price expectations also need to be adjusted to reality, as they have risen sharply due to the COVID-19 pandemic. Property owners must revise their price expectations and sell their properties at market prices, as overpriced property prices are no longer financeable due to the interest rate hike.

In contrast, loans for commercial real estate have seen a significant increase. An increase of 25.6 billion euros has already been recorded, representing a 3.2% growth.

According to the latest figures, fewer building permits were issued in March 2023, totaling only 24,500 so far. This is a 29.6% decrease compared to the previous year, equivalent to a decline of approximately 10,600 building permits. The interest rate hike in 2022 led to a 10% decrease in this regard.

#Summary report KI - Kreth real estate media 06/2023

#Is germany facing a real estate bubble in 2023?

There are indications, but whether an actual real estate bubble will occur in germany cannot be answered definitively. Various details need to be taken into account. The interest rate, real estate demand, and purchase prices all play a crucial role. In the years 2021 and 2022, real estate prices increased significantly, reaching levels 30 to 40% above the usual market price. In 2022, the benchmark interest rate was already raised four times. The mortgage rate increased from 1% in January 2022 to 4% in March 2022. Those who decided to finance a real estate purchase in March saw a substantial increase of 50% in financing costs. For example, with a repayment rate of 2%, the monthly repayment amount rose from 1,000 euros in October 2021 to 2,000 euros per month within a few months due to the increase in the mortgage rate, with a loan amount of 400,000 euros.

How does a real estate bubble form? In short, a real estate bubble forms when property prices rise rapidly and persistently, even exceeding their actual market value, when demand for real estate increases significantly, when financing interest rates remain low, and then suddenly demand comes to a halt, causing property prices to collapse.

#Summary report KI - Kreth real estate media 05/2023

#A look back at the housing market in 2022

The housing market kept us consistently engaged in 2022, with constant developments that demanded our attention. The introduction of the new property tax caused a lot of chaos, and the energy crisis was a major topic of discussion. At the same time, the German Bundestag heavily influenced concepts in the housing sector, with KfW (Reconstruction Loan Corporation) funding programs and similar initiatives being crucial topics for the real estate industry. Efforts were made to create new incentives for housing construction, particularly in the area of social rental housing, in order to provide affordable housing. Just before the end of the year, on December 16, 2022, this law was hastily passed by the Bundesrat (Federal Council).

#Summary report KI - Kreth real estate media 01/2023

#The Trend of Living in the Suburbs

The housing costs in the major cities have become increasingly unaffordable for many people. As a result, a new trend has emerged, which involves living in the suburbs. These are residential areas that are well-connected to the transportation network, located near a major city, and yet offer a green environment. This is particularly seen as an affordable and attractive alternative for families to fulfill their dream of owning a home. The term "suburbs" refers to all residential areas within a radius of 50 kilometers around the capital city.

#Summary report KI - Kreth real estate media 01/2023

#Forecast for 2023: Rising vacancies in the office segment

The effects of Corona, inflation, and remote work have significantly influenced investment behavior in the office real estate sector. While it has been a lucrative investment option in recent years, the outlook for 2023 is expected to undergo significant changes. The projected prime yield of 2.65% in 2022 is likely to decrease drastically. Instead, an increase in office vacancies is forecasted. Major cities such as berlin, düsseldorf, munich, hamburg, and frankfurt will be particularly affected.

#Summary report KI - Kreth real estate media 01/2023

#The housing market shows signs of stabilization

In comparison to the previous year, the housing market in 2022 experienced only a moderate increase in housing prices, approximately 4.9%. However, this slower price growth makes it increasingly challenging for private customers, particularly in major cities, to afford homeownership. Nowadays, families need to have a monthly net income of €5,000 in order to be able to purchase a home.

Furthermore, potential buyers of new constructions should expect longer waiting times due to increased inflation and a shortage of construction materials.

#Summary report KI - Kreth real estate media 01/2023

#The continued boom in the real estate market in 2022

The real estate market for houses and condominiums continues its impressive boom in 2022 without any signs of slowing down. Property prices have already reached new record highs, some of them surpassing the average by up to 40%!

In 2021, private and commercial properties in Germany were traded with a total value of around 321 billion euros. The market share of commercial properties amounted to approximately 111 billion euros, representing an increase of 13.7 percentage points compared to the previous year 2020.

The real estate boom shows no signs of weakening and continues into 2022.

#Summary report KI - Kreth real estate media 01/2023

#Tips for tax avoidance on inherited properties

If you have inherited a property, you are obligated to inform the tax authorities. This obligation exists within the first three months after the inheritance. If the value of the property exceeds the specified tax exemption threshold, you will have to pay inheritance tax to the tax authorities.

But what are the limits? Spouses can inherit up to 500,000 euros tax-free, children can inherit up to 400,000 euros from each parent, and grandparents can pass on up to 200,000 euros to their grandchildren. Siblings, cousins, and life partners have a tax exemption threshold of up to 20,000 euros.

Inventory, household items, or personal belongings are tax-free for spouses, children, and grandchildren up to 41,000 euros.

When would the inherited property be tax-free? When you use the property yourself. Spouses, life partners, and children can inherit a property tax-free if they reside in it. However, there is a condition: you must move into the inherited property within 6 months and cannot sell it within the next 10 years, provided it is a house or condominium with a maximum living area of 200 m².

What other option do you have with an inherited property? Gifting! If the value of the property exceeds the specified tax exemption threshold, you could gift the property during your lifetime. What are the advantages of this? The same tax exemption thresholds mentioned above apply, with the exemption limit for individuals applying within a 10-year period. However, please note that with a gift, there are certain requirements and limitations to consider.

It is recommended to consult with a tax advisor or legal professional for personalized advice regarding your specific situation.

#Summary report KI - Kreth real estate media 03/2023

#Fines for Landlords: Greedy landlords face stricter penalties - Fines of up to 100,000 euros possible

Since the COVID-19 pandemic, some landlords have had the impression that they can do whatever they want and drive rents sky-high using every trick in the book. However, the Federal Council has now put up a stop sign and doubled the fines from 50,000 euros to 100,000 euros.

This penalty applies to landlords who do not adhere to certain limits and excessively raise their rents. In the future, landlords must adhere to the established German rent index and not exceed it by more than 20%. If they do, the landlord commits an administrative offense and may face fines of up to 100,000 euros.

The Tenant Association welcomes this new regulation to protect against further rent increases. Given the already almost unaffordable rents, it is time to take action.

#Summary report KI - Kreth real estate media 03/2023

#Popular metropolises for real estate investors - Top 20 ranking

When purchasing a new condominium or house, it is important to carefully consider which metropolis is attractive to potential buyers. An analysis of 63 attractive cities worldwide for real estate investments has yielded astonishing results. Here is a list of the top 20 most popular places:

Stockholm - Surprisingly, Sweden leads the ranking. 

London - London has always been a sought-after location, although hardly affordable anymore. 

Paris - The city of love

Copenhagen 

Amsterdam 

New York 

Munich 

Zurich 

Toronto 

Sydney 

Vienna 

Berlin 

Tokyo 

San Francisco 

Dublin 

Melbourne Melbourne (double entry) 

Washington 

Geneva 

Brussels

#Summary report KI - Kreth real estate media 03/2023

#Property Tax Declaration: Home and Landowners Must Submit a Declaration Starting Summer 2022

Starting from the upcoming summer, home and landowners will face a new obligation: the property tax declaration. It is a reform of the property tax that allows for detailed information and data exchange between tax consultants and the tax office.

The calculation is as follows: Property value x Millage rate x Tax assessment rate. The property value is determined by factors such as the land size, age of the property, rental income, property type, and land value.

Since property values have increased by approximately 12% in recent months, the millage rate is set to be adjusted to ensure a stable property tax determination. The millage rate can vary between 300% and 900% depending on the region.

Here is an example: A single-family house in Hamburg, built in 1950, with a living area of approximately 125 m² and a land size of 780 m² would have a millage rate of around 480%. To maintain revenue stability, the millage rate in this example would need to be adjusted to approximately 421%.

The tax rate is 0.034%. As the property value has been continuously increasing since 1935, even by about 3.6% to 12.3% since 2020, a 25% discount must be achieved for social housing and cooperative housing. Therefore, the hypothetical tax assessment rate needs to be adjusted.

Calculation example: With a property value of €300,000, a millage rate of 421%, and a tax assessment rate of 0.034, the property tax amounts to €429.41. The property tax declaration must be submitted between July 1, 2022, and October 31, 2022.

#Summary report KI - Kreth real estate media 02/2022

#High Costs Ahead for Homeowners

The coming years will bring high costs for homeowners, as announced by the new federal government. The government's new goal is to become a carbon-neutral nation by 2045.

For property owners, this means that residential buildings in energy efficiency class G must be upgraded to at least class F by 2030. Energy consumption needs to be reduced from a minimum of 250 kilowatt-hours to 200 kilowatt-hours.

In November 2021, a new law was passed prohibiting the installation of oil heating systems. If such heating systems are still in place, they must be replaced with alternative heating systems.

The new climate protection goal requires homeowners to take measures such as renovation, upgrading, and retrofitting to improve the efficiency of their buildings.

#Summary report KI - Kreth real estate media 02/2022

#In 2021, the German real estate market experienced a remarkable price surge

Particularly in the third and fourth quarters of the year, prices for condominiums and houses rose rapidly. According to the Federal Statistical Office, the increase was around 12%, marking the largest price increase in the 2000s.

The real estate market has a significant impact on our financial system, as banks tend to overestimate prices by about 10% to 30%. This leads to an overvaluation of property prices, which in turn can cause financing problems for potential buyer groups.

#Summary report KI - Kreth real estate media 02/2022

#Hamburg is getting a new district - Grasbrook 

On the southern bank of the Elbe River, the new district of Grasbrook is set to be built in Hamburg. This district will consist of three neighborhoods: Moldauhafen, Freihafenquartier, and Hafentorquartier, located right next to the Hafencity. The architects who designed the Elbphilharmonie have been selected for this project.

Over the next 20 years, Grasbrook will be developed into a mixed-use innovation district that combines residential and commercial spaces. A total of 3,000 apartments will be built, with 30% of them being publicly subsidized. Additionally, around 16,000 jobs will be created to ensure a strong social infrastructure. The new district will also cater to the needs of startups.

Innovative companies will have the opportunity to utilize the area for research and development. In particular, the Hafentorquartier will experience low-emission and port-related activities.

#Summary report KI - Kreth real estate media 02/2021

#Who pays the broker's commission now? 

The new law on broker's commission, which was passed in June 2020, will be implemented nationwide from the year 2021. Initially, it will come into effect within the next 6 months.

Which federal states are affected by this legal change? The affected federal states are Berlin, Hamburg, Brandenburg, Hesse, and Bremen.

What exactly changes? There is now a clear regulation. Previously, the party who had commissioned the broker paid the brokerage fee. From now on, a 50-50 rule applies, where both the seller and the potential buyer each bear 50% of the commission.

Which properties does the new law apply to? The new law applies to private individuals who want to sell their private property or land through a real estate agent.

#Summary report KI - Kreth real estate media 2020

#A rent-to-own model for low-income families - the government makes it possible for you! 

After the reintroduction of the Baukindergeld (child allowance for homebuyers) in January 2018, the government is planning something new for you. Further information can be found in another article on this page.

It's not a joke, soon you could finally afford a condominium as well. You may be wondering how that's possible. Who is eligible for this model? The model is aimed at families under 40 years old with children. Here's a financing example for a 100 sqm apartment priced at €212,000.

Option 1: 2 adults + 2 children, duration of 24 years, monthly installment of €933. Option 2: 2 adults + 2 or 3 children, duration of 33 years, monthly installment of €756.

The government would be the builder for you, and you would purchase the apartment through regular installments from them as part of a rent-to-own agreement over a period of 24 or 33 years. Who is this project intended for? It is aimed at families under 40 years old who have no significant equity capital. Over the years, you will transition from being tenants to property owners.

You may be wondering why the government is doing this for you. Currently, there is still a severe housing shortage, which the government aims to address in the long term with this project model.

For more information, visit: State-sponsored rental space.

#Summary report KI - Kreth real estate media 2020

#The housing allowance for families with children."(child allowance for homebuyers) was reintroduced in 2018. 

So far, approximately 50,000 families have applied for the housing allowance for families with children.". How does the new concept work? The government provides approximately €3 billion in funding annually. Who can apply for the housing allowance for families with children." Families with children who want to purchase a condominium, buy a house, or build their own house. Families with one child can apply for around €1,200 annually and receive it over a period of 10 calendar years. The total subsidy amounts to €12,000 per child. The income limits for single parents and families have been set at €90,000. For larger families, the limit may exceed €15,000. Who can apply for this funding? Single parents and families with children who have received a building permit from January 2018 or have signed a purchase contract for a condominium or house from January 2018 onwards. It is also possible to submit a retroactive application for the subsidy. The housing allowance for families with children." program started in January 2018. For more information, visit: Apply for housing allowance for families with children."

#Summary report KI - Kreth real estate media 2019