(Bloomberg) -- Germany’s older homes are getting cheaper as buyers demand a discount to offset the rising expense of upgrades to meet tougher energy-efficiency rules. 

In October, prices for existing properties fell to their lowest level since the first half of 2021, declining 7.7% from a year earlier. Newly built houses though increased for a third month in a row, rising 1.6%, according to a survey by Berlin-based real estate financing platform Europace. 

The divergence reflects the impact of new environmental requirements that require major renovations of existing buildings. Higher material costs increase those expenses and result in buyers seeking a discount. The gap also indicates that interest rates are less of a factor than they were earlier this year when prices were falling across the board. 

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“We see a cautiously normalizing market with slightly better general conditions,” Europace co-Chief Executive Officer Stefan Münter said in a statement on Thursday.

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