I will start the record in just a few seconds, so the podcast will be recorded, just to let you know. We will have a short presentation by our CEO, Ronald, and after this, hopefully followed by a classic Q&A session, which I will introduce to you after. Now I may hand over to Ronald and start the record. It seems, Ronald, that you are already ready. Please welcome.
Yes. Hello, everyone. Yeah, presentation of the Q1 numbers of Hypoport 2025. You know it already. We delivered strong growth in the first quarter, double-digit growth rate, rates in the core, thanks to an ongoing recovery of the German mortgage market, something which is still in the core of our major business unit, real estate and mortgages. Second good news comes from, as well, the housing environment. Our ERP platform for the housing sector is keep accelerating in subscription rate. A strong success as well there and the base of good performance of the financing platform segment in Q1. There is as well a downside of Q1.
You can say that everything outside of the residential mortgage market, all credit markets are still depressed, distressed, thanks to an, let's say, leaving government, which didn't focus on prosperity here in Germany, and a new government, which was just established at the beginning of the second quarter of this year. The environment in the first quarter was, frankly said, open. Okay. As usual, we start with the mortgage market as the core of the real estate mortgage segment. You're aware that housing is, let's say, even when we talk about the mortgage market usually, and the underlying housing market, it's a fundamental macro development here in Germany that we have a housing crisis, that people would like to find a fitting place for their families, typically for German families in the moment when they get triggered by family events like children's.
With a frozen renting market, this more and more, this, this life events more and more, needs to, be processed, in the homeownership market. The renting market is in Germany frozen for a couple of years. Governments try to tackle the issue of rising rents with additional, with additional regulation. This led to a massive mismatch between the rents of existing contracts and new rents. You can say in metropolitan area, it is roughly one to two. The new rents are double of the existing rents. This locks the renting market because everyone with an existing renting contract has a huge benefit to stay in his apartment. The turnover in this market dropped sharply. Families, people who got triggered, do not find any solution in the renting market anymore. For Germans, this is a massive change. 55% of Germans live in a rented apartment.
To leave such a rented apartment to a new rented apartment gets more and more impossible. On the same side, the regulation makes it less attractive for especially smaller private landlords to invest in housing. They withdraw from this market. If the apartment gets empty, they sell or they even try to sell it with a renty. The owner then trying to get the rent out, something which increases the homeownership market here in Germany over the period of a couple of quarters now. All this said about the renting market, just the perspective of affordability is in a positive trend. We see stable interest environments for five quarters now. A massive change to 2023, you can say.
We see a significant supply in units that, for sale, something which is a massive change compared to the period of 2022 and earlier, where there was a lack of supply side always. We still see high new construction costs, which does not make it easy to build something new, but does not affect the existing property market. A positive thing, we see rising incomes, thanks to, let's say, a labor shortage, especially with skilled labor. This is the core target group of our, of, of our business model. Homeownership is linked to people with a significant income, middle class and upper class. They usually were still renting, and this is changing right now. What did not change in the first quarter is regulation. The leaving government did not focus on the housing market. They are, they're, let's say, completely different motivated, and areas where they were looking for.
They increased in density and in quality, the regulation around housing, which was negative and especially on the construction side. As well, they reduced the support programs for middle-income people to buy something. Let's say, we couldn't imagine a worse regulatory environment than we saw in the last years. This is now over. We have a new government. Voting was at the end of last year. First quarter, they spent finding a new coalition. Since April, we have a new coalition. People are waiting now for the necessary decisions to come to enable more families to acquire their home. This influenced the first quarter market. You can say that people were waiting, but still number of transactions are up. Okay. This in, let's say in charts and numbers, what does it mean?
Stable interest environment, first quarter, a little bit more volatile than last year, but in a similar range. Number of properties for sale publicly on record high level, number of units for rent on record low level, and slowly twiddling up real estate prices, but still a massive gap between new construction and existing homes. There is still a 15% discount, compared to the situation of three years ago. In this market, or in this environment, the mortgage market kept recovering here seen with the black line. You can say the mortgage market is already in the area of the 2018 numbers now. Soon, we will see it, in a, in a, inflation adjusted in a positive, let's say above the starting point here five years ago. Closing the gap to the pre-crisis time. Europace has in the same time outperformed the market.
This is not new for you. Last quarter, we gained 34% in volume on the platform compared to the first quarter of 2021. Bundesbank showed even a slightly stronger growth, 37%. It's still a little bit puzzling for us where this number comes from. We see parallel that SCHUFA reported a 21% increase in applications for newly applied, newly confirmed mortgages. With an increase of the loan amount of something between 5-10%, this would come up to something below 30% market increase, but not 37%. Something inflates the, some transactions inflates the Bundesbank number this quarter. We expect that the market is slightly below 30% and we gained 34% in volume in this quarter. We gained this across all areas. Dr. Klein, our own franchise network, which is a really good indicator of the market development, is 30%+.
We see a strong performance of the brand. Dr. Klein had the highest number of lead generated online in history, so even more than in 2021 and 2022. Strong lead generation. First quarter, finally again, fully loaded workforce of advisors in this franchise network. Every lead gets distributed, every lead is taken care of, but the people are busy. The advisors are busy as well, and that's good. From here, we need to grow with additional advisors now and scale and keep scaling Dr. Klein back to new record high levels. Slight outperformance of this development, which is more or less in line with market, I would say, is savings banks, usually a strong outperformance. We have here a lot of joint IT projects with our joint venture partner Finanz Informatik, which are in rollout.
We expect an acceleration of market share gains here, compared to this first quarter here. A lot of positive things is going on. A lot of new integration in this sector is rolled out during this year. Outperformance again, cooperative banks, they keep migrating to us and they keep taking, they keep taking, Europace is super serious as well in their sector. Even without a joint venture with the centralized IT service provider. Here, Bausparkasse Schwäbisch Hall is a strong supporter and opens up more and more doors in the sector to gain traction. Cooperative banks who are using Europace are outperforming their peers. This is proven by the sector that there is a massive positive performance of advisors using Europace compared to the traditional work environment in their IT service provider software.
This ends up with a total of 34% for the whole platform. Again, we are on track with the recovery and heading to new records. When you look on the perspective of what are the mortgages used for, which we transact right now, then you see that especially the purchase market where existing properties are sold and financed is the base of the recovery. Here we saw the second best quarter in our history already. Just the three years, the exceptional great quarter of the beginning of 2022, where interest rate changed from below 1% to more than 3%, exceeds the current volume. You see that there is a market share gain plus an underlying change in the market because, without the change of conduits from being rented to being occupied by homeowners, this would not be possible.
There is a massive amount of units to be transferred between the renting market and the homeownership market. What does not contribute to a positive recovery of the market is new construction. We are still down more than 50% below the 2022 first quarter peak and roughly still 50% below what we saw before. There are two segments in this new construction. One is single family houses. There, the recovery is already slightly better. We talk there about roughly a third below pre-crisis level, but still dispersed. What we are massively missing still are activities from developers and sales of newly built condominiums in multi-family houses in metropolitan areas.
The reason is that this massive change in demand in 2023, in the second half of 2022 and 2023, has stressed this whole developer market, and they are still not recovered from this stress. They are happy if they finally sell their open projects and the last not sold units, that they finished their projects. There is still no movement in this market to really start a lot of new projects. This is well linked to the nervousness of banks. The capital requirements are still high, just by, by bargain were changed to 1st of May slightly, but there is a high capital requirement to finance development. They are still working out their existing portfolio before starting something new. This new construction is missing in the market.
This keeps, let's say, rising the tension, in combination with the net migration to the metropolitan areas where exactly these units are missing. Okay. Still far below traditional volumes is the refinancing market. We still are in this base where old mortgages, which were closed longer than 10 years, fixed interest appeals do not need to be refinanced and have a lower interest rate than you currently can get. This will change latest in 2027, but for now, this part of the market stays on an extremely low level. As well, on a surprisingly low level is everything which is modernization, decarbonization of the housing sector here in Germany. Even when it was an ideological goal of the last government, they did not design the subsidy programs and the rule for modernization in a way that it is possible.
There is an historic low level of investments there, even when, thanks to our climate goals, latest in 2045 German or 2050 EU, we need to decarb our housing sector and massive investments need to be done. Every quarter which passes increases the volume that needs to be invested to get to a decarb. Okay. From a perspective of sales channels, the growth on a little bit longer perspective, the last nine years, you can say here, we have a similar volume in the market, nominal, not inflation adjusted, but nominal value. What gained volume was brokers from roughly 20%- roughly 30%. So 50% growth within this market for growth for brokers. This, in the core, powered by Europace, and we even took incremental market share here.
In addition, we were able to expand our reach as well to the cooperative and the savings banks, both getting closer to 25% share of their new generated mortgage volume comes via Europace or is transacted via Europace's solutions in their branches. This is really a very positive development, that we keep growing in both of the sectors as well, strong so that our overall coverage of the market is getting better and better. Only slightly negative perspective on the real estate mortgage segment is property valuation. You know, next to the massive market changes in 2022, there were massive regulatory changes and a mismatch of our strategy to enter this market with the regulatory on market environment. We needed 2023 to, let's say, recover from a massive mismatch of resources.
2024, we could focus on optimizing the business model, building technical infrastructure, IT solutions for the new regulatory, new regulatory environment. And now we see that, step by step, Value AG is recovering from its massive losses, which it made in 2023 and still significant in 2024. We reduce these losses and slowly work us in the direction of a break even. In total, for the segment, it was a great start in the year. If you exclude the losses from Value AG, we talk about EUR 14 million in EBIT for the first quarter. This was the best, the first quarter ever. 2022 was even better, but it was a, it's one of the strongest first quarter that we had here already in recent history. The growth track keeps us, is alive.
The focus for this year is maximize the profitability out of this market share, market development and the market share gains. For now, we focus on realizing everything what we built already and finish the projects and bring innovation to the market to optimize our profitability. Still keep focused on profitability and this works out very well. Our next segment, financing platform, first market, housing, housing societies. This is, they are pretty similar, you could say, to the homeownership market with a massive change. They are the ones who provide renting units and the massively regulated renting market is a significant problem for them. Second is, they are usually not buying existing properties. They are building them and keep them forever. With the current environment of construction regulation in combination with the renting regulation, this is not feasible.
They massively reduce the investment in new housing and, same regulation like for the homeowners as well for the housing associations. You, in the carbon, in the decarb sector, saw the last government wanted it, to, that something helps there, but did not provide the necessary regulatory environment. They cannot invest in decarbonization in the way that they would need to, to meet our goals. This all leads to record low investments of this sector in housing, last year, whole last year, but as well first quarter. I cannot remember a time where this sector, which has a massive impact on German GDP and has a massive impact on German housing in the metropolitan areas, was, so lacked so much attention of politics and, and it was so, reluctant to finally be, to, to finally be able to build again or modernize again apartments.
They are waiting for the new government now to set the right, or create the right environment. We talk about deregulation and we talk about subsidies in the combination of both. The new government promised this and, in other sectors in the first day the new government was established. Now that something happened already here, it's still, let's say new ministry is in place, but no action was taken by now. We hope that, in the next months, we see here actions, then this is necessary for the German housing market. While they can't invest in the housing stock, what they can do is invest in their technical environment. And there we are right now super successful with rolling out our new ERP platform for them.
Our goal is to create a perfect, open IT infrastructure for them where we easily can help them finance and ensure their portfolios. They can rent their units in a very efficient and modern way, in an IT environment, for their customers and their employees, which is modern, something which is new to this industry. Over a period of, you see here, six years now from piloting our system, we are generating traction and getting relevant for this market, taking market share. A nice success story, still in something we invest millions in, but within a recurring revenue model, something where for now we expect even next year already a break even.
Next topic, German Mittelstand corporate finance, something where we saw a lift up in built project volumes, but still on financing rules and subsidy rules from the old government, lots of volatility and decisions still in this transition from last to new government. Let's say, call it low margin projects for us that had to be closed, by the major part of German industry is waiting for the new government to establish a new set of regulation, power this with the fitting subsidies to bring Germany back on track out of the recession to back on growth track. With this, we expect for the next quarters to have a massively change in this environment here. There was a lot promised from the new government and we see in other areas, migration, international relations, that they are fulfilling their promises.
Let's hope that they are fast here as well in the business environment. It is necessary for recovery of the German industry. Last area, as well a market with, let's say, struggling environment in the first quarter, personal loan business. We have multiple quarters of recession now here in Germany, a light recession, but it's recessive. Banks hesitate to increase their loan portfolios. Consumers hesitate to take new loans for consumption in the end. The market is down. We are slightly up by gaining new partners, migrating new partners on the platform, and new sales structures of them. We keep slightly growing, but the environment could be massively better than this, what we see right now. As a result, double-digit growth, yes. Good, massive investments, especially in the housing industry and the ERP platform there.
So, small decline in probability for the first quarter. What we need here is a better market environment, not a recessive market environment for all this credit market that we provide here. Last segment, insurance industry where we cover three areas with different business models. In the core, three platforms for personal insurance, occupational insurances, and industrial insurances. We saw, see small growth in all three when we look on the transaction volumes or my, let's say, volumes on these platforms. We see even more projects going forward in the right directions. What we still miss is progress in the monetization. That's why, let's say, a slight level of disappointment for the first quarter numbers.
We expect this to improve during the year, that we are back on growth track here for the full year, and even getting closer to a double-digit growth in all numbers. In the end, we are still here in the transition from a very heavy investment phase to an incremental gain in profitability. The first quarter was not in line with our expectation here. Okay. For the group in total, we see a strong first quarter in line with our expectation and recovery of the mortgage market. On a longer perspective, you see that we are well ahead of last year, getting closer to the record year of 2021. Let's see how close we end up there. Yeah. This is, for next year, we expect a new record year for this year.
It's closing the gap, you can say, and improving especially our profitability, in a systematic, stable and recovering market. There we are at market and recovery of the market, inflation adjusted. We are still far below the volume of a market which we saw in the first decade of this century. Since the European integration and massive labor movement to Germany, this was a growth market. You see that we are still far below this longtime growth trend where housing demand was high here in Germany. What we did not see in the second decade of this century was the transition from renting to home ownership market. This is a core source of additional volume for us here in this market, that professional landlords or small landlords sell to homeowners financed with mortgages via our banking system and this way via Europace.
In addition, we expect the recovery of the new construction site from the current extremely distressed and low level. We expect a recovery of the refinancing and we expect this, that, the goal of decarbonization of our household stock needs EUR 20 billion of investments per quarter to be financed in the end by mortgages. With all this said, we expect the mortgage market from the current EUR 60 billion level to uplift in the area of EUR 75-100 billion, so higher level than we previously saw. You can say returning to the growth path which we were in in the last decade. This can still take some years, but we do not see another macroeconomic perspective on the German mortgage market than this. This said, short- term outlook, we feel confident with the 2025 forecast, which we gave two months ago.
First quarter is, perfectly in line with, our expectation. For the upcoming years, we see double-digit growth in the top and bottom line. I would hand over now to Jan to moderate the Q&A session in case there are some questions today.
Yes. Thanks for your quote and your presentation, Ronald. Just to let you know, we now start the Q&A session. If you have a question, you can ask this by using the raise your hand button. It is under these three dotted points here, under the three dots. Then you have a blue button, where you can just sign up, or if you find it is too complicated or just cannot find the button, just put it in the chat. I have a question and I will hand over to you. I will mute you and then you can raise your question.
Otherwise, of course, you can also put on and write down your questions in the chat. I will just read it and ask Ronald. These are the ways how we can create the Q&A session. I will just type it down here for you, the instructions in the chat. You can look up, read. We will wait a moment and see if we have some questions.
Now we have already some in the chat here. Yeah. Someone posted already a number of questions. Oh,
I see. I see. Okay.
I can start. Okay. I see. I can start already. You see, you see as well. Okay. Cool. Yeah. I see them as well. This is, so first, savings banks and our joint venture with Finanz Informatik. There are two major rollouts right now.
One is the integration of Europace in the work environment of mortgage advisor within the IT service platform of Finanz Informatik. We get a better integration, so it's easier to transition from the traditional process to the Europace process. There is an integrated version as a choice for every savings bank in the future offered by Finanz Informatik. This is a major step forward to get more savings banks accepting Europace as an, or the, brokerage model as a market approach. The second is that we provide together with Finanz Informatik a so-called Cockpit Immobilia, so a solution end to end with the consumer to manage your properties and the linked mortgages to this within your environment, your technical environment, which you as a consumer use from your savings bank, from Finanz Informatik.
The touchpoint of the mortgage business, the digital touchpoint, is now jointly proposed to the consumers. This again will enable savings banks or will attract more savings banks to use the Europace environment for the advice process or even an automated mortgage transaction process, which we provide with one-click Bovie. A Value AG second question, Value AG recovery. For now, we do not expect for this year a break even. We expect a break even for next year, even with the positive traction which we saw in the first quarter. It is still EUR 500,000, and it was still EUR 500,000 in loss in the first quarter. There is still, let us say, something to work out. Even when we are a little bit ahead of our plan, there is still a certain level of uncertainty.
For now, we expect the losses to decline in this year, but no break even for this year. Let's hope that we get surprised here.
Cost inflation in the financing platform.
Yeah, I talked a lot about the success of the ERP platform for the housing association. This comes with an additional investment, necessary in project management to onboard all these new clients. We have an acceleration in our pipeline of new clients, and to migrate housing associations to our ERP platform is a massive, human labor intensive project we have to do with each of these clients. For now, all starting places, we call them, so all migration slots for this year and even next year are already sold.
The pipeline is long and we have to expand, expand them, massively our resources to migrate this, housing associations, expecting an ongoing higher migration need in the near time future. It means that we even create more drag in our direction and take more market share in the upcoming years. Further investments, let's say it was a significant increase that we saw in the first, in the first quarter. There will be more increase in OpEx, you can say for migration, if the demand keeps as high as it is right now. With the current inflow of new clients, we really struggle to, let's say not disappoint our, this industry, this, this, extremely integrated, connected, industry, with a too long waiting list for migrating to what we bought.
Let's say for now we reach a new level, we need to bring the people, productive in the project. This is, this takes some time, but for the upcoming years, we may expand even more. A key difference between these two KPIs which we provide for the personal loan business. One is transaction volume on the Europace system in personal loans, and this transaction volume comes from usually from Europace partners, advisors which use Europace to broker personal loans. The white label offering is a subsidiary where we offer banks the work of the advisor as well and broker these third party loans for their clients. This is a BPO outsourcing business, you can say, where we generate additional commission income, plus transaction fee for the Europace system.
The white label brokerage volume is part of the overall transaction volume of Europace, but the business model is slightly different. One is commission based and includes then third party commission. This is what we pass through to the partner who provides the client, so banks usually, and while the others, solely a transaction fee, which is loan based, but much smaller than the brokerage fee.
Okay. This week, all four questions answered, I think. Yes. I hope so. If not, Maxim, feel free to just drop a short note and we will follow up on this. There is another question, which is a pretty long one. I will try to shorten this a little bit.
The question is, Ronald, you mentioned that you don't see a sharp decline of the German mortgage market, but, against the background that the German bond has increased. Why is that?
Yeah. Yeah. Okay. I didn't dive deep there in the presentation. What happened in mid-March was that the German government, or let's say not government at this time, future government, proposed and announced a massive additional, additional debts for German government. This sent the government bonds up, interest rate 10 years, 60-70 basis points. Mortgage rate went up between 35 and 50 basis points, parallel to this. For us, this short term, it shortened the advice time. People closed their open mortgage applications faster. We saw a, had a positive impact in March for this.
After this, there usually this, it's so far normal, it went, it normalized again, it went down. We saw, at beginning of April, and this, these are public numbers as well, for instance, provided by SCHUfa, we saw, a drop to, let's say, previous year level. From, plus 20% in application or 21, to more or less zero, compared to last year for a couple of days, surrounding Easter. For now we see from this a recovery again. We saw trickling down interest rates since then. All what was increased in interest rates, it trickled down later again. Now today we saw a sharp rise of 10, 10 basis points again. We are in a slightly more volatile market. This is nothing that impacts the housing decisions anymore.
When you go back on this slide where we show the interest rate development, this is always in this what happened last year as well already, not as fast as this year, but we are, let's say, more or less moving sidewise with the interest rate. Nothing that on a longer term, not talking about days or a couple of weeks, will affect the willingness of Germans to borrow their first mortgage to finally get a home for their family. There is a part with, let's say in general, we expect midterm declining long interest rates in Europe because of the general macroeconomic environment where we do not see a massive growth.
We expect inflation to be under control and with this ECB to lower short term interest rates, and gaining as well trust for the long term interest rates to trickle down again, something which we saw already multiple times now with Trump's, let's say, yeah, Putin's and Trump's international politic, we see a higher level of volatility, but nothing is going to change that. Europe is not a super growing area with high interest rate environment anymore.
Okay. Cool. Thanks . Next question, which is on ERP system. So ERP software, so this is on the housing association, on the institutional housing association. It seems that the migration of customer is the bottleneck. Are there any plans to team up with some IT service provider, some third party that we can speed up this process? Yeah, would be great if possible.
We checked it out, but, let's say, to migrate to our platform is a skill set which, let's say, in the core needs to be developed, and it needs to be developed if we do this by ourself or if we train someone else. If you hire the people or we train third party people, it's a pretty similar effort. This is not an area where there is a high level of skills available because the migration volume in the past was limited in this market. That's why there is no existing market for specialized, smaller entities who could help us to ramp it up, unfortunately. We see that we can still improve in efficiency in the processes and with, again and again, migrating clients from the same previous solution to our platform, it's something where we get better and faster.
But, let's say this learning curve we need to go through by ourselves.
Okay. Thanks for this. It seems that we do not have any questions right now. Just a reminder, you can, oh, there's another one. No, it's just thank you, which is also welcome. It seems that we do not have any additional questions. Just as a reminder, once again, you can just type it in or use the raise your hand button, whatever is more to your preference. We'll wait another second, but it seems we do not have any additional questions. I like to hand over to you, Ronald, again for last words.
Yeah, let's meet again in three months. Sorry, in three months for the half year results in the beginning of August.
Up until then, we will be busy, optimizing our profitability and using whatever the market offers us, on this path. Thank you. See you then.