Falling house prices: why buyers will have the best opportunities in major cities in 2025
After years of rapid price increases, the signals in the housing market are turning: in many major German cities, supply and negotiating room have improved noticeably. This trend is likely to continue in 2025 - a real advantage for buyers who take a strategic approach. The reason: Falling house prices meet more attractive financing conditions again and a growing portfolio of properties that can no longer be sold at the maximum prices of previous years.
For owner-occupiers, this means that better locations are becoming more affordable. For investors: net initial yields can be calculated with conservative assumptions for the first time in a long time. However, a professional inspection remains important - location, condition and energy efficiency determine the quality of the purchase price.
Utilising the 2025 market opportunity: We analyse the purchase price, location, energy and rental potential - precisely, discreetly and with strong negotiating skills. Arrange an initial consultation now.
What is driving the price decline in the metropolises?
Interest rate turnaround light: After the rise in interest rates in 2022/2023, many buyers have paused. With moderately falling financing conditions (assumption: further slight fall in mortgage rates in 2025), demand is normalising - but sellers' price expectations have already fallen. Result: more discounts, more deals.
Offer structure: Higher construction costs and stricter regulations are slowing new construction, while at the same time existing flats are coming onto the market because owners are reassessing refinancing and maintenance. This is leading to realistic pricing, particularly in A and B locations in major cities.
Energy efficiency as a price driver: Flats in need of refurbishment (heating, façade, windows) are often offered at a discount. Buyers who are familiar with subsidies and refurbishment planning can realise potential value here.
Where will the best opportunities arise in 2025?
- Good micro-locations away from the absolute prime addresses: Central neighbourhoods with good public transport connections, but without a top price tag, are often negotiable first.
- Properties with a moderate modernisation backlog: Bathroom, electrics, windows older - but floor plan and statics sound. Price reduction today, increase in value through plannable measures tomorrow.
- New build acceptances from 2020-2022: Sellers often accept market-based discounts in order to create liquidity.
- Capital investment on middle floors: Less competition than for a penthouse or ground floor with garden - better return per euro.
Quick financial check: how 1 percentage point of interest works
Calculation example (simplified assumption, without guarantee): Purchase price €600,000, equity for ancillary purchase costs, loan €600,000, initial amortisation 2 % p.a.
Interest 4.25 %: Interest € 2,125 + amortisation € 1,000 = 3,125 € / month
Interest 3.25 %: Interest € 1,625 + amortisation € 1,000 = 2,625 € / month
Result: Around €500 in monthly savings. This improves your household accounts - and your scope for negotiation, e.g. for modernisation or special repayments.
Typical refurbishment check (rule of thumb): If the efficiency measure costs around €30,000 and increases the cold rent achievable by €1/m² for 80 m², that's ~€80 per month or €960 p.a. - worthwhile if vacancy rates also fall and the market honours the better energy class.
Buying strategically: 6 professional tips for the buyer's market
- Financing commitment before the viewing: Clarify with bank or financial advisor, compare fixed interest rates, plan special repayments. Sellers respond to reliability.
- Price logic instead of gut feeling: Comparative prices within 500 metres, year of construction cluster, energy status. Target: market-based Offer - not „low at any price“.
- price in the refurbishment schedule: Energy performance certificate, heating, roof, windows. Obtain quotes from tradesmen or calculate flat-rate risk premiums.
- Calculate ancillary costs realistically: Depending on the federal state, this often adds up to 7-12 % (land transfer tax, notary, land register, broker's commission if applicable). Include this in the total return.
- Check rental and WEG documents: Protocols, level of reserves, upcoming measures - there are many hidden costs or opportunities here (e.g. good maintenance discipline).
- Use timing: Longer-listed properties, end of quarter or end of year, private sellers with pressure to move - discounts are more likely here.
Avoid mistakes - how to do it right:
Error: Just stare at the offer price. Solution: Total cost of ownership (interest + amortisation + maintenance).
Error: Ignore energy class. Solution: Refurbishment concept incl. subsidy check before completion of purchase.
Error: No renegotiation after expert opinion. Solution: Use expert findings to factual renegotiate.
City-specific thinking: micro-location beats postcode
The 500 metre compass helps: What are the walking distances to the S-Bahn, daycare centres, green spaces? How are the immediate surroundings developing (neighbourhood development, commercial mix, noise protection)? A flat 300 metres away may be valued 5-10 % more fairly in 2025 if the noise level decreases or local amenities are better. Use this for your argument - Qualitative location factors are again price-effective in a buyer's market.
The following applies to investors: minimise vacancy risks. Favour floor plans that are in high demand (2-3 rooms, 55-85 m²) and ensure flexible rentability (home office niche, balcony, good lighting). In 2025, yield is not just interest and purchase price Rentability is the third pillar.
Conclusion: 2025 is the year of determined, well-prepared buyers
The combination of falling house prices, stabilising financing and growing supply is making major cities attractive to buyers again. Those who scrutinise figures, property quality and location carefully are now negotiating conditions that were hardly conceivable two years ago. Assumption: If the moderate easing of interest rates continues, the best opportunities will be seized early - competition will pick up, but at a new, more realistic price level.
Your next step: Free initial consultation with purchase price and location check. We accompany you from the review to the negotiation - transparent, precise, successful. Get in touch now.
Note: Estimates are based on market data up to the end of 2024 and plausible assumptions for 2025. Regional deviations are possible; a property-specific analysis remains crucial.
