The most important question regarding the further evaluation of real estate prices is likely the development of incomes. If we look at the last 50 years in Germany, prices in West Germany have steadily increased.
If we base it on the DM, today we are talking about prices for a single-family house between 1 - 1.5 million DM. Twenty years ago, when the Euro was introduced, prices ranged between 200 - 400 thousand DM.
The payout of my life insurance policy in 2034 should amount to 600,000 DM, a very high amount in 1996, the year of conclusion. At that time, the insurance agent told me, with that amount you can buy a house and still live well for another 20 years.
Many people back then also financed their real estate with capital-building life insurance policies. It all went wrong. I have long since canceled my life insurance. Probably the sum in 12 years would just barely be enough for a new car.
In 1990, shortly after reunification, prices in East Germany quickly aligned with West German levels, but only for about 2 years. From 1992 prices fell again, then dropped completely until around 2005. At that time, real estate was practically given away and worthless. Keyword junk properties, etc.
From 2010 onwards, prices rose again and real estate prices have increased significantly ever since. Adequate to the interest rate cuts.
However, if we fall into a depressive economic crisis with mass unemployment and a currency crisis, which would force the state to drastic restrictions and austerity measures, prices could also drop massively in West Germany.
If one opts for inflation from the central banks, we will laugh at today’s prices and talk in 10 years about prices ten times as high.
Since no one has a crystal ball and the pendulum can swing in either direction, currently every position carries extraordinary risks. I will keep my feet still for now.