Prices for residential property in Germany fell at a record pace in the second quarter. From April to June they fell by an average of 9.9 percent compared to the same period last year, as the Federal Statistical Office announced. This was the largest decline since the time series began in 2000. Compared to the first quarter of 2023, residential properties were 1.5 percent cheaper, but the decline was smaller than in the previous two quarters of minus 2.9 and minus 5.1 percent.
The key reason for the falling purchase prices is likely to be lower demand as a result of increased financing costs. Added to this is the persistently high inflation.
Economist Martin Güth from Landesbank Baden-Württemberg (LBBW) pointed out that the negative development follows a years-long boom. “Apartments are therefore still not cheap and, due to the increased interest rates, are still affordable for fewer and fewer households,” said Güth. The prices are likely to fall a little further, but the speed will remain manageable. “The market is tight, living space is scarce,” said the economist. “Housing therefore remains expensive – whether renting or owning.”
Significant price declines were recorded in both cities and rural regions. However, the downward trend was stronger in the cities. There were large price declines compared to the same quarter last year in the top seven metropolises: Berlin, Hamburg, Munich, Cologne, Frankfurt am Main, Stuttgart and Düsseldorf. Here the prices for single and two-family houses fell by 12.6 percent, and 9.8 percent less had to be paid for apartments than a year before.
“The declines were smallest in the sparsely populated rural districts,” said the statisticians. Here, condominiums were 7.0 percent cheaper than in the second quarter of 2022, while single- and two-family homes even cost 8.1 percent less.