Anyone who wants to sell an older, energy-inefficient house is often faced with the question: is it worth renovating before selling? The answer to this question depends heavily on the location of the property and the target group.
In many rural regions – for example in the Kaiserslautern district – the real estate market is characterized by rather restrained demand. Falling population figures in numerous West Palatinate municipalities mean that investments in extensive renovation measures before the sale often do not pay off. Buyers generally come from the region and prefer to decide for themselves which refurbishment measures they want to implement – whether for financial reasons or to realize individual ideas.
The situation is different in economically stronger regions, such as the Vorder- and Südpfalz. Here, the population is still growing in many places, which is also reflected in higher real estate prices. In cities such as Landau, for example, the average selling price for houses is over 3,000 euros per square meter. In such markets, it can make sense to at least initiate energy-efficient renovations in order to increase the selling price or make the property more attractive.
Overall, it is clear that the decision for or against refurbishment prior to sale should always be made on a site-specific and market-driven basis. General recommendations are of little help here – what is needed is a well-founded assessment of the local conditions.
The property market in the Palatinate also followed the nationwide trend for a long time: prices climbed until 2022, boosted by historically low interest rates and correspondingly high demand. The picture changed with the European Central Bank’s interest rate hikes from 2022 – in response to the rise in inflation, which was largely caused by higher energy prices as a result of the war in Ukraine. Financing costs for properties rose significantly and sellers had to adjust their asking prices.
Since then, properties with a poor energy balance have been particularly hard hit by the price falls. These properties not only cause high ongoing operating costs – due to rising energy prices and increasing CO₂ pricing – but often also entail considerable refurbishment costs, which can be incurred after the purchase.
Unrenovated buildings therefore record above-average price markdowns. In a market in which buyers are increasingly focusing on energy efficiency and sustainability, such properties are coming under greater pressure than other segments.
The extent to which unrenovated houses in particular are influencing the general fall in prices cannot be seen in detail from the available statistics, as these generally reflect the entire real estate market. Nevertheless, the figures show significant declines: within one year, purchase prices for houses in Ludwigshafen fell by 10.8 percent and in Speyer by 8.5 percent (as of March 1, 2024). The average price per square meter for houses in Landau also fell by 11.8 percent in 2023. In Kaiserslautern, on the other hand, the decline in the same period was just 0.24% – albeit from an already comparatively low price level.
At the same time, there are initial signs of a countermovement: Prices are rising again in individual cities, which is attributed to the recent fall in interest rates, among other things. Landau, for example, had already recorded a price increase of 10.2% by the end of September 2024 compared to the start of the year.
The effects of these developments vary greatly from region to region. While some owners can still calmly accept price falls, others are coming under increasing financial pressure – especially if the planned sales proceeds were an elementary part of their own life planning. Traditional models, such as building a house at a young age with the aim of selling it at a profit later on and investing in a smaller condominium, are increasingly being undermined by the opposing price trends for existing and new buildings. This is because while the cost of new builds continues to rise, older existing properties – especially without energy-efficient refurbishment – are losing value in many places.
Despite regional differences, one thing remains the same across Germany: housing is still in short supply. Although many owners have been able to benefit from significant increases in the value of their properties in recent years, this does not change the current challenge – particularly with regard to the older building stock.
In view of the stagnation in new construction, this older building stock is becoming increasingly important. In 2023, only around 294,000 apartments were completed nationwide – far below the federal government’s target of 400,000. And the trend is still pointing downwards: In July 2024, building permits fell by more than 19 percent compared to the same month last year. Affordable housing in particular remains in short supply in many places – including in regions such as the Western Palatinate.
Older houses, even if they have not been renovated to make them more energy-efficient, are therefore still finding buyers. The focus is increasingly shifting from the ideal state to feasibility: energy-efficient modernization is being sought, but comprehensive measures such as complete facade insulation, new windows and modern heating technology are simply not affordable for many owners. According to a brief expert report by the Paritätischer Wohlfahrtsverband, half of owner-occupiers have no more than EUR 34,500 in savings – 13% even have no reserves at all.
If you want to get a realistic picture of the condition of existing buildings, there is no way around a well-founded assessment by experts – such as chimney sweeps or energy consultants who have direct access to heating systems and building fabric on a daily basis. Their practical experience shows how wide the range of existing buildings actually is – and that pragmatic solutions are required in many places in order to secure affordable living space and at the same time initiate long-term energy improvements.
The real estate market in the Palatinate is exemplary of a development that can be observed nationwide: After years of price growth, rising interest rates, energy prices and new regulatory requirements caused a noticeable change in the market from 2022. Unrenovated existing properties with a poor energy balance are particularly affected – they are losing value while operating costs are rising. Buyers are becoming increasingly sensitive to energy-related defects and are factoring in high follow-up costs.
Nevertheless, older housing remains an indispensable part of the solution in the tight housing market. New construction activity is stagnating, while demand for affordable housing continues to grow – particularly in regions with declining construction activity or moderate price levels. Unrenovated properties continue to offer opportunities for owner-occupiers and investors alike.
It is clear that blanket recommendations for energy-efficient refurbishment prior to sale do not go far enough. Individual strategies are required depending on the location, target group and financial situation of the owner. What is becoming apparent everywhere, however, is a growing awareness of pragmatic refurbishment solutions. This is because costly complete refurbishments are not financially feasible for many owners – instead, realistic, step-by-step measures are coming to the fore.
The old stock is therefore not becoming an obsolete model, but a challenge with potential – provided that it is dealt with in an honest, differentiated and practical way.