Market development 2023/24 in the Ratingen – Velbert – Mettmann region

The result: significantly fewer real estate transactions, hardly any new construction projects, and highly uncertain prospective buyers.

The central question facing the real estate industry in 2024 revolves around what people can still afford and are willing to pay in light of the new market situation—how can sellers' asking prices, realistic market prices, and buyers' budgets be reconciled?

Amidst these general upheavals, the cities of Velbert, Ratingen, and Mettmann are showing different reactions to developments in the real estate market.

The main problem has become abundantly clear since mid-2023 at the latest: nowadays, when financing a property, an annuity (the annual loan payment) of around 6% must be expected – but while interest rates have continued to rise, the budgets of potential buyers have often remained unchanged. By way of comparison, just a few years ago it was possible to finance €500,000 with an annuity (interest and principal repayment) of around 3%. Nowadays, buyers with a comparable income can only obtain financing of around €250,000. If they have little or no equity, they are forced to wait to buy until prices either fall or new government subsidies become available.

Currently, those with high equity are benefiting most from the market changes. Nevertheless, the forecast for 2024 suggests that prices could stabilize depending on the type of property and its location, as the drastic interest rate hikes of recent months may have already come to an end. Interest rates have been stable for several weeks, and construction interest rates have even fallen below 4% again recently.

In Velbert, declines in real estate prices were observed in 2023, at least for older existing properties and those in need of (energy) modernization. Newer properties built to contemporary construction and energy standards are less affected by value adjustments, while properties in need of renovation have seen price declines of over 20% in some cases. Similar trends can also be observed in investment properties.

In contrast to Velbert, the market in Ratingen is more complex as it is closely intertwined with Düsseldorf. The closer the proximity to Düsseldorf, the more noticeable the dynamics on the real estate market become, resulting in significant differences even between different districts.

In Mettmann, potential buyers are offered a balanced mix of the market conditions described above.

Amidst a changing financing landscape, higher equity requirements are emerging, accompanied by uncertainties and delays in lending due to the wait for subsidies and, for example, KfW loans. Banks are thus increasingly coming into focus.

At the beginning of the year, a discrepancy between current asking prices and market and mortgage lending values is still to be expected. This circumstance will require buyers to contribute a higher proportion of equity. This dynamic reinforces the role of banks in financing, but also means that lending will remain cautious and the pool of buyers will therefore remain small.

The current subsidy landscape at the federal, state, and local levels is difficult to assess: some subsidies have been exhausted, while others are only available under specific conditions that are unattainable for many. The subsidy options for 2024 remain complex, while it remains to be seen what political (budget) decisions will be made in this regard.

Due to changing energy policies, stricter regulations, and new funding opportunities, the energy efficiency of properties is increasingly being taken into account in property valuations. In particular, the decline in prices for existing properties in need of modernization indicates that potential new owners are increasingly concerned about having to implement the necessary energy efficiency measures and comply with requirements at considerable additional financial expense—which is why demand is lacking and asking prices are having to be adjusted.

Expert committees play a crucial role in the valuation of real estate. The expert committees in the municipalities compile what is known as the purchase price collection. All notarized purchase agreements are forwarded by the notaries to the expert committees so that they can be evaluated. Based on these evaluations, the expert committees prepare a real estate market report, which is usually published on an annual basis. However, in view of the current volatile market developments, a half-yearly report was published in 2023 by the Ratingen expert committee in order to be able to evaluate the market more accurately using current key figures. This interim evaluation, which had become necessary, shows the rapid pace at which prices have changed. At the end of the year, the evaluations of the purchase agreements recently revealed two special features in the regional market:

1. Existing properties ahead of new builds
   While real estate sales in the region stagnated for much of the year, the number of single-family homes sold in Ratingen that had been on the market for more than six months and were in need of significant modernization rose significantly toward the end of the year—because sellers realized that their original asking prices were no longer realistic and showed greater willingness to negotiate in view of the approaching winter. This can be seen as a possible harbinger of a general alignment of asking prices and realistically achievable prices/buyer budgets in the coming year, with a focus on existing properties in particular need of investment.

2. Land with no price decline
   Another surprising observation made by the expert committee was that some undeveloped land in Ratingen was sold at prices that either corresponded to the current standard land value or were even higher. This suggests that undeveloped land, at least, is not likely to experience any decline in value compared to developed land – and may even increase in value. However, the number of undeveloped properties available for sale within a given period of time is usually low. Building plots are in short supply in Ratingen.

Comparatively less dynamic changes are expected for 2024. However, it will remain exciting to see how the real estate industry and the real estate market can resolve the dilemma that, on the one hand, the need for housing remains unabated, but on the other hand, very little is being built and existing housing is becoming increasingly difficult to finance.

The complex market situation requires increasingly intensive consulting services to ensure that the interests of all parties involved are optimally taken into account.

At Kartheuser Immobilien, we offer comprehensive services and expertise that go far beyond the analysis of market developments. We rely on trust, honesty, and realistic assessments, ranging from successful brokerage to support as a reliable partner in all real estate matters.