Economic Outlook

The German economy does not gain momentum. There are currently no signs of a noticeable economic upturn. This is the conclusion of the Kiel Institute's winter forecast, according to which gross domestic product will only stagnate in 2025 (0.0 percent). In fall, the forecast was still at +0.5 percent. The main reasons for the downward revision are the expected US tariffs and the worsening crisis in German industry. GDP is expected to shrink by 0.2 percent in the current year (fall forecast: -0.1 percent). The recession has now also reached the labor market, with the unemployment rate likely to rise to 6.3 percent.

Energy-efficient building renovations lead to higher sales prices and rental income, providing an important incentive for property owners to invest. This is the key finding of a recent analysis by the Kiel Institute for the World Economy (Kiel Institute). Since 2022, apartments with an energy efficiency rating of A+/A command an average premium of approximately €650 per square meter compared to similar apartments with a D/E rating. For monthly rents, the premium is around €0.85 per square meter. However, this significant price advantage is primarily observed when the energy efficiency is certified through a Bedarfsausweis. In contrast, the premium is notably smaller when based on a Verbrauchsausweis.

The recovery of the German real estate market has continued in the third quarter of 2024. Prices for apartments and single-family homes rose compared to the previous quarter (Q2 2024), even year-on-year they saw a moderate plus. A comparison by year of construction shows that prices for newly built apartments are already close to their peak again.