Hello everyone, and welcome to our penultimate presentation of today's conference, which will be Hypoport. CEO Ronald Slabke will run us through the presentation and the next development at the company. With us as well is Head of IR, Mr. Pahl. Some housekeeping points. As usual, the presentation will last 15 -20 minutes, followed by 10 minutes Q&A. As you can see, the presentation will be recorded, and the questions can be asked using the chat box on the bottom right. Given that we only have 30 minutes time, I'd like to kick it off and like to hand over the words to you, Ronald. The floor is yours.
Yeah. Welcome from my side as well for a sneak preview of Hypoport SE. For the ones of you who are not aware of this, we are digitalizing three industries in Germany. Core business is real estate and mortgages, where we digitalize the process of home ownership and the financing of home ownership here in Germany. In the financing platform, we serve three different industries or their credit needs and insurance is doing what it says, platformization of the insurance business here. Let's start with the core figures of last year. After a tough time, thanks to the interest rate changes in 2022, we saw the second year of recovery, record level for revenue and gross profit in 2025, and the third best year of EBIT by now.
This is in a market environment where our core market is still in the middle of a recovery and some other areas are still struggling because of the general macroeconomic environment here in Germany. To understand our current performance, let's have a first view on our core business, home ownership and the financing of home ownership here in Germany with multiple entities along the value chain and a platform that powers that all. Home ownership in Germany, just to give you the big picture, we are on a long trend of increasing population thanks to a massive net inward migration to Germany. Plus, the population has a tendency to create more households, so more and more people live in single households, increasing the number of households and the demand for housing space.
Same comes with other trends like home office right now that we see a massive additional demand over the last 15 years, you can say now, where the German building construction sector tried to handle this additional demand, but in the last years failed to meet thanks to the regulatory environment for new construction here in Germany. We are right now in a decline on new constructions, which gives this market a, let's say, solid base for price development. In general, it led a great macroeconomic environment for housing here in Germany because of this permanent additional demand and the limited supply side, so that investing in housing in Germany is actually a pretty safe thing to do, especially for homeowners. This is financed in a current market volume. If you trust Bundesbank, EUR 240 billion. We are in the middle of recovery.
You can see this here pretty well. You saw the development before the sharp change in interest, and let's say the turning point and the recovery as we stand right now. The last three quarters were weaker. I would say the volatility on the interest rate side, triggered by additional government needs for funding in the beginning of last year, and still no economic impact of this additional spending. I would say from here, positive outlook for this year because finally this additional money and the higher interest rate we have because of this rise in the economy and changes the sentiment in general. Home ownership in Germany is the only way for German middle class, for the future, to live in a self-decided, in a place where they want to live, in the way with the space they want to live in.
The renting market, which were previously dominant for German middle class to live in, is closed thanks to a massive regulation we introduced over the last 10 years for renting housing space. This has frozen the renting market to a degree that the only way for a family to move is to buy a new home. If you are triggered, if you are in need of new space, you need to buy. For this, you need a mortgage and you need a process with an optimal digital approach to this to make it in a secure and safe way for yourself. This is what long-term supports our growth track that we look on a market which is transitioning from a renting market to a home ownership market.
You can see this pretty well as well on the numbers of properties offered and this massive change we went through over the last here six years. Properties for sale are on the rise and the availability is good for now. On the other side, properties for rent are on a historic low level offered, and let's say the rents offered is now above this, what you pay in interest if you acquired by yourself and funded via mortgage. This leads as well to a certain structure of our business and what we are financing on the platform. In the last quarters, you can see that we reached already record high level of financing of the purchase of homes, condos and single-family homes, and this in the still market that is on the way to fully recover where we came from.
New construction is still on a low level. I showed you earlier already that we are still before the turning point. What is financed right now will be finished in two years, and what didn't finish two years ago will not be built right now. The purple area of new construction is something to still keep rising over the next years to fulfill the massive needs on demand on this market. Look to the future. We expect home prices in Germany to keep ticking up, because of this need and because of the demand, and under the assumption that the interest rates are more or less stable from where we are right now. New construction costs will go up as well.
Both we finance and with both increasing faster than inflation, we have a positive outperformance in our core market for the upcoming years with a high certainty. This, in addition with market share gains, which we delivered over the last 20 years now, it makes certain that we outperform the overall market and use our position in the market, the position of our platforms to gain additional revenue and outperform with this then as well our profitability. Talking about our product a little bit, when I talk about marketplace or platform, this is the core of our solution, Europace. We are matching the interest of consumers for a mortgage to the supply side of 800 banks right now and all their products and all combinations out of their products.
Platform is fully integrated, so the complete sales process for a mortgage advisor up to the credit decision officer is a part of the platform across entities. A mortgage advisor is able to sell its own products of the same bank in the bank branch, or it can be a mortgage broker and use the variety of 800 banks to find the optimal product for the consumer. Over the last seven years now, automating this process using the massive amount of data that we have and that we see constantly on the platform, we use AI to enhance the platform to make it for all users, so the advisors and the loan officers, easier to operate, take repetitive work out of their hands and place it into AI.
With this, increasing the advantage Europace give each of them in the competition in the market for closing mortgages with consumers. We integrate Europace with more and more, let's say, partners and interaction points along the value chain, including and up to the consumer. There's as well a mobile app for the consumer to be part of the process, to monitor the process, to contribute to the process, to be assisted by AI, to make the right choice in the right moment, and to a certain degree, challenge as well the advisor already. With this constant improvement of the platform and our high investments into the platform, we give the advisors on the platform, in the banks, or in the mortgage brokers a huge advantage over the rest of the market. This leads to market share gain of our partners constantly.
As I said, Europace is the center of this ecosystem. Multiple entities support the flow of applications, so consumer mortgages through the platform. We integrated this value chain and enhanced this value chain for the experience of each of them. Our own entities is an additional way to increase our footprint in the market, to use synergy between our entities to make certain that in the end, every mortgage in the German retail business goes through Europace. In growth trend last year, double-digit, strongest in the cooperative banking area, where we grew by 20% in the savings banks and service bank area and our own mortgage broker franchise network, it grew double-digit by 13% and 15%. Over-performance of the platform, +13% last year. You can see this third-best year in transaction volume on Europace.
With this, we generated record high revenue and gross profit. You see that we are able to expand our margin in the business as well. These are market shares here, long perspective, last nine years. The German broker market is powered by Europace, you can say. Before Europace, it was introduced in 2002, it was a niche market. We now grew to roughly 30%, and 60% of this is going through Europace. There's only one, and it's still the largest German mortgage broker belonging to ING, which runs its own operating system. Everyone else is using Europace already. We have a strong position as well now in the savings and cooperative banking industry, with roughly 1/4 of their business going through Europace already.
Strong partnership in both sectors to scale this, and we expect to grow this to 100% together with them and to replace the internal systems in both of the sectors. Only a big point you can say when you compare this on a long perspective here, private banks lost a lot of market share in the German mortgage business in the last years. Our core partner there decided to reduce its exposure in German mortgages. With this, you can say our market share in the private bank area declined as well. In the end, for none of the left banks in the private banking industry, it makes sense to operate on their own system. Sooner or later, they have to use Europace as well to be competitive with the rest of the market.
Part of our, let's say, struggle in the last years, you can say was heavy investments in valuation with great development over the last two years, you can say, and let's say closing the gap to profitability with our valuation business and making valuation an integrated part of the mortgage experience. Something which you don't feel anymore as a consumer, as an advisor, as a loan officer, something that just happens, and we are on the way to deliver this all in a full digital way, as much as the regulator allows us to do this. The future is digital here. In general, strong performance last year.
We are on a record level of revenue and gross profit, and we show that major part of additional revenue goes through the profitability, and we use our market position here to come to a very profitable business back, which we had already in 2021, year before this crisis environment popped up. Short sneak preview really on the other business models. Financing Platform, three sectors. Core is the social housing industry here in Germany, where we provide a digital platform to run the business on it, to finance everything what you need to finance, and to insure everything that you need to insure in your housing portfolio.
It's an industry of roughly 6 million units here in Germany, and we attack this with a digital approach and see, especially in the core unit, in the ERP system for housing associations, a strong growth path and take market share from the market leader and change the way that this whole industry thinks about digitalization. Great success over the last years, still something where we invest money, but something that is contributing more and more as well already on the positive side for our development, our growth, and our profitability. As well, we service, with a platform, small and medium enterprise in Germany, their financing needs and how they attract state subsidies for their business. We finance as well via platform consumer business here in Germany, the typical personal loan going through our platform. The whole unit saw an okay-ish year last year, you can say.
All three markets are still at the bottom of the life cycle. The German economy could deal much better, and we could grow much more when the private investments in these areas are returning to a normal level. Insurance, three parts of the insurance market that we support, the general insurance with policies for consumers usually, the employee-linked or employer-linked insurances like pensions and industrial insurance which are on a contractually based, insuring specific risks of large industry groups. In all three areas, we offer platforms. Platforms are growing. The supporting units around them struggle a little bit, I would say. Last year was not, for the surrounding unit, the best year, while the platforms, each of them could deliver double-digit growth and we could increase our footprint in all these three parts of this insurance market.
In general, still this segment with the, let's say, the most potential for development in market position. Something where we look actively as well to strategic options with other partners to improve the speed of market acceptance here. This said, we are back to the Group in total and to the question how Europace is going to develop in the next couple of years. As I said earlier, we have a great market environment with the shift from renting to homeownership here in Germany, so that we expect the need for financing from a consumer side to fast develop positive.
This, in combination with increasing prices, leads to higher expected mortgage volumes and with additional investment needed for the transitioning of the German housing stock in the question of how it's heated and how much energy is needed there, we come to the expectation that from the current level of something around EUR 60 billion, we will grow to EUR 75 billion-EUR 100 billion per quarter in mortgage needs here in Germany. In this environment, we expect to take additional market share, especially in the area of regional banks, and the fact that taking into consideration the mortgage volumes will take additional market share as well, and we will increase our margin contribution out of this business to outperform the growth track of market, significant double-digit as we in the past did, and use this primarily to boost our profitability in the business. AI is playing a big role in this.
We are investing since seven years and automate the value chain. We have a very central position in the market, in the value chain. We have the data, and we have with this the ability to monetize AI, innovate it. Everyone profits from it. Consumer, more certainty, more visibility, more transparency. The agents and loan officers with higher automation and more focus to this, what is needed by them to help consumers to get from empty to homeowner. With all them profiting, we see a significant chance for margin expansion for us using this. AI will be everywhere. It will be as well in front of our business models replacing Google. It's not a threat for us, it's a huge chance. For this year, we expect a massive increase in profitability. We guide EUR 40 million-EUR 55 million EBIT for this year.
The positive outperformance of 2025 comes from loss reduction of business where we are still early stage and invest. We are gaining market share in this year and get a net positive profit contribution from this. We see a positive market environment for the total year with a small risk of, let's say, macroeconomic shocks coming from volatile geopolitical environment, I would call it. This creates the uncertainty level for EUR 40 billion-EUR 55 billion as guidance. We can make sure that we perform, I would say EUR 10+ million better than last year. What the market will do around us is an additional profit contribution to this what we will bring. When thinking about Hypoport and investing Hypoport, you look on a growth company that investing heavily, that is not at the end of their, let's say, profitability scale, what is possible.
We expect to continue this and grow to new record levels in profitability hopefully this year already and long term to, let's say, doubling this margin that we reached in the last year already. This said, it took me 23 minutes, and we still have left a couple of minutes for Q&A from your side.
Yes, you're right. We have a couple of questions, and you already mentioned it in your presentation. AI is everywhere, and if you look at the top, you find quite a lot of questions also surrounding that topic. Let's start off with the last question which came in. It's regarding trading environment. What effect on mortgage volumes have you seen since the start of the Iran war and the associated increase in interest rates?
Yeah, let's say, short term, increasing interest rates trigger always shorter sales cycles. People who started their financing process will make faster decisions when they see the interest rates going up, while they take slower decisions when interest rates goes down. In short term, every increase in interest rates increases the closed mortgage volume in a German mortgage business. Even with the public available datas for this year, you can see this already.
Perfect. The question came from Robert, and Simon is asking a question regarding your guidance. To what extent you are affected in the Iran conflict already? Do you believe it is more likely to reach the lower end of the guidance range since then?
Well, let's say, the Iran conflict is not a stable situation, I would say. It's something that changes on a daily basis what it means. With the macroeconomic environment that we see right now and everything what is, let's say, already passed through inflation expectation and long interest rates development, we feel pretty comfortable with our forecast for this year. It can be different tomorrow, as you know. We live in a volatile world right now, with the chances in both directions. For today, I would say the chance that we reach the upper level and the lower level is pretty similar.
Okay, great. Talking about your margins, Sascha is asking, is Hypoport now sustainably on the path of improving margins rather than focusing on building new business areas that initially costs money?
Yeah, let's say this shift started in 2023 when we had to learn that our core market is more volatile than we expected. This higher volatility means that we had to change our strategy, how fast we reinvest cash flow. We are on a path to increase net cash generation to have a strong business model fitting to the volatility which this market has. For now, this year, next year, we will focus on margin expansion, not on additional business ideas to start new.
Okay. Thank you. We have three questions. They all are centering around the AI topic. You had one slide, I think at 35 it was. Can you maybe summarize, do you see AI more as a threat or an opportunity for you? Will there be new competition coming from AI? Which areas of your business will be affected most by AI?
Yeah. First of all, I personally see this since 10 years as a huge opportunity for us, and we execute the strategy now for eight years, you can say nine years, adding features, adding automation to our platforms that only we are able to offer thanks to the data that we have out of the past and the current data that we just see. Every day we have thousands of applications going through the platform. We have a lot of knowledge there to use this data with AI to create more and more streamlined process for everyone in this. Is there a threat? We challenge this constantly, and we have difficulties to find one. A specific threat for our business model we couldn't find, and we are looking for this now for a couple of years.
Would be great if someone would have an idea and we would like to challenge this, how to actually, let's say, create an algorithm that may replace anything that we are providing already to the market. That's why we are focused on using the technical abilities that AI is offering us, to transform this market, in a fully digital approach, something which would not have been possible, which would not have been possible without AI. AI came at the right moment for us, and is something where we already right now invest in monetizing it.
Great. Thank you. I hope that covers most of the questions regarding AI. Given that time is running up, I'd like to wrap it up at this point in time. Maybe we should use the opportunity to talk about the AI challenges and opportunities at a later stage. Seems to be that there's a lot of interest in that. Ronald and Jan, thank you very much for the presentation. Very interesting. For all of you who are interested, there is the final presentation now, with Hornbach. I will put in the link here in the bottom. You can just switch over. All of you have a successful day, and thanks for participating today.
Thank you.