Germany's real estate market is undergoing a transformation driven by climate goals. Over 60% of existing housing must be renovated in the next decade to meet EU targets, impacting prices and priorities. Despite a market correction due to higher rates and lower income, recovery is expected, influenced by financing, location, and now, energy efficiency.
The German Building Energy Act mandates 65% renewable heating in new buildings from 2024 and a fossil fuel ban by 2045. Older homes need upgrading due to poor insulation and fossil fuel reliance. To meet EU energy efficiency targets by 2033, around 12.5 million homes (64% of total stock) require renovation.
However, this transition poses challenges and costs, with estimates ranging from 740 billion to 1 trillion euros by 2033. While renovations offer long-term savings, upfront expenses may require additional financing. Energy efficiency is also impacting property prices, leading to demand for renovation discounts and altering buyer preferences.
In essence, Germany's property market is shifting toward energy efficiency to meet climate goals. This impacts housing demand, pricing, and financing strategies, necessitating substantial renovations in the coming years.