HypoPort: German Housing Market Cooling, Sales to Fall 4.4%

HypoPort AG faces headwinds as the German housing market is forecast to contract, with property sales expected to fall by 4.4% this year. The projection, from the Hamburg-based Gewos Institute, reflects diminished demand linked to rising construction interest rates and geopolitical concerns including the Iran conflict.

Total real estate transaction volume is projected to decrease by 2.0% to approximately €211 billion. The most significant decline is expected in single-family home purchases, down more than 5%. Increased construction costs and broader inflation are contributing factors. Despite the downturn in residential sales, transactions involving multi-family homes may see slight growth as investors benefit from rising rental income.

Building loan interest rates have reached their highest level since May 2011, currently around 4.25% annually, and could climb to 4.5%. This increase is substantially impacting affordability and potentially reversing recent gains in building permits. Gewos analysts forecast limited growth potential for the German real estate market in the medium term, signaling a prolonged period of adjustment for HypoPort and the wider sector.