After a sharp decline last year, property prices in Germany have recovered somewhat. However, there are significant differences depending on the region and type of housing.
The prices for apartments and houses in Germany have stabilized slightly again after significant declines. Prices for residential properties still fell by 2.6 percent between April and June compared to the previous year, according to the Federal Statistical Office.
Compared to the previous quarter, however, prices rose slightly – by 1.3 percent. “This is the first increase compared to a previous quarter since the second quarter of 2022,” the authority wrote. However, there are clear regional differences. While prices for apartments in sparsely populated rural regions continue to decline, single- and two-family houses have become more expensive on average in all types of regions.
Large cities with moderate growth
In the seven largest German cities – Berlin, Hamburg, Munich, Cologne, Frankfurt, Stuttgart and Düsseldorf – prices rose by 1.6 percent for apartments and 2.3 percent for single- and two-family houses in the second quarter of 2023 compared to the previous quarter.
Compared to the previous year, however, prices are still lower: apartments are still 1.5 percent cheaper and houses four percent cheaper than in the same quarter last year. Since mid-2022, prices on the real estate market have cooled significantly. That was when the years-long boom reached its peak – since then, prices have fallen sharply.
Loan interest as the main cause
On average, houses and apartments became 8.5 percent cheaper in 2023 compared to the previous year. The Kiel Institute for the World Economy (IfW) spoke of the sharpest price drop in around 60 years. In the first quarter of this year, prices had fallen by 5.7 percent compared to the same quarter last year.
The main reason for the end of the real estate boom was rising interest rates on loans. Many people can no longer afford their own home, and sellers have to lower their prices. In recent months, however, the situation has eased somewhat: construction interest rates have fallen, making real estate a little more affordable again.