German Housing Price Decline a Preview of 2024 USA Market?
While UK and US house prices show a pattern of peaking in 2022, dipping, then rallying again in 2023 prior to the recent interest rate hikes that surely will send them plunging, data from the German housing market, which faces similar conditions, offers a likely preview of what's in store for both markets in 2024: an elevator straight down.
What comes directly next is anyone's guess, but as this bubble pops, and prices return closer to sustainable levels as supported by affordability fundamentals like price to income ratio, the speculative game of hot potato going on amongst real estate investors in recent years and especially since the pandemic is likely to come to a crashing halt, causing economic turmoil.
Meanwhile, even as German housing prices sink, rents remain extremely high, much like in the USA. With mortgage rates so high, until base housing prices drop more significantly, buyers rightly consider now a poor time to buy and are flocking into the rental market instead, where this surge in demand allows landlords to retain the advantage in price negotiations.
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