August 22, 2024

Housing bubble index Q2/2024: Distribution stagnates, but urgency continues to fall

The current sharp rise in rents contrasts with the moderate increase in purchase prices. This is positive for the risk of a bubble, as the high valuation level of property is increasingly justified. At the same time, the slight fall in interest rates is leading to an increase in new lending for residential construction, which in turn harbours the potential for further price rises and thus increases the risk of a bubble.

The urgency of the bubble risk is diminishing as rents are rising faster than purchase prices, reducing potential price setbacks. However, the spread of the bubble risk is stagnating as the number of affected districts remains high.

The setback potential, which indicates the urgency of the bubble risk, has been falling continuously since the interest rate turnaround. In the second quarter of 2024, price growth in the top 7 cities was only 29% higher than rent growth, compared to 49% in the second quarter of 2022.

Development of the rebound potential and the interest rate in the period Q1 2005 to Q2 2024

The empirica bubble index is a quarterly index that assesses the risk of a property bubble in various regions of Germany. The proportion of districts at risk is stagnating, as the thresholds for a bubble risk continue to be exceeded in many places. An detailed analysis of the current empirica Bubble Index  (in German) has now been published by empirica for Q2 2024.

housing market property rents housing market bubble regional data 2024
Housing market data Q2/2024: Purchase prices stable and rents continue to rise

Housing market data Q2/2024: Purchase prices stable and rents continue to rise

Purchase prices generally appear to have bottomed out and are falling more slowly than before or are already rising slightly. However, there are no uniform trends, as there are still major differences depending on the segment or region. In general, purchase prices for new builds tend to rise more than for existing properties, for condominiums (ETW) more than for single-family homes and in urban regions more than in federal states.
Housing market data Q1/2024: Slow stabilisation of purchase prices

Housing market data Q1/2024: Slow stabilisation of purchase prices

The purchase prices in the empirica property price index for Q1/2024 indicate that the bottom has been reached. This is shown by the new data from the empirica property price index for Q1/2024. While new construction prices continue to show a stable trend, purchase prices across all years of construction should now also have reached a stable level. The first increases can already be observed across all years of construction in cities with a rather low purchase price level.
Housing bubble index Q3/2023: Fewer and fewer regions at risk

Housing bubble index Q3/2023: Fewer and fewer regions at risk

The empirica housing bubble index indicates that the risk of a housing market bubble in Germany is decreasing. In recent quarters, there has been a change: there are fewer and fewer vulnerable districts. The danger is still there, but its extent is getting smaller. The number of endangered regions has been falling for three quarters in a row.