German financial institutions have recently paid out a third more loans to finance real estate. More money is flowing primarily for single- and two-family homes, but also for condominiums.
Banks in Germany are again issuing significantly more real estate loans – especially for apartments and houses. The volume of loans rose to 20.1 billion euros in the second quarter – an increase of one third, albeit from a low level. More loans were granted primarily for single- and two-family houses, but also for condominiums.
Overall, more loans were granted again: In the second quarter, the banks belonging to the Association of German Pfandbrief Banks (VDP) provided financing totaling a good 31 billion euros – 15.6 percent more than in the comparatively weak period of the previous year.
This means that new business has reached its highest level since the third quarter of 2022, said the association, which represents the most important real estate financiers in Germany, including Deutsche Bank, state banks and large savings banks.
Financing for office properties continues to decline
In contrast, there was no revival in new business in commercial real estate, where the office market in particular is in crisis. Here, the loan volume fell by almost seven percent to around eleven billion euros. “The growing financing volume reflects the noticeably increased demand for residential property,” said Jens Tolckmitt, General Manager of the VDP. He sees signs that the crisis in the real estate market is coming to an end.
Only recently, the VDP had noted a stabilization in prices for the second quarter. Previously, sharp increases in interest rates and construction costs had triggered a real estate crisis. According to the Federal Statistical Office, prices for houses and apartments in Germany fell by 8.4 percent in 2023 – the sharpest year-on-year decline since the time series began in 2000.