According to a Bundesbank analysis, houses and apartments in Germany are still often overpriced, despite recent falling prices. “The overvaluations in residential real estate did not decrease on average in 2022,” the Bundesbank stated in its monthly report. “According to current estimates, real estate prices in the cities were between 25 percent and 40 percent above the price indicated by socio-demographic and economic fundamentals.” Price declines were observed in the second half of the year: inflation and rising mortgage interest rates narrowed the financing scope of many prospective buyers. The demand for housing decreased. At the same time, increased construction prices and a lack of housing kept the price level high, especially in metropolitan areas. All in all, residential real estate was about as overvalued on average over the year as before.
Bundesbank – Real estate still overvalued – Economy
