Prices for houses and apartments in Germany continued to fall at the beginning of the year. Residential properties were on average 5.7 percent cheaper nationwide in the period from January to March than in the same period in 2023, the Federal Statistical Office announced based on preliminary figures. Compared to the end of 2023, residential properties fell by an average of 1.1 percent in the first quarter. The price decline is thus continuing, albeit at a slower rate than last year, when a record drop of 8.4 percent was reported.
Prices fell in both cities and rural regions. The biggest declines were observed in the metropolises of Berlin, Hamburg, Munich, Cologne, Frankfurt am Main, Stuttgart and Düsseldorf – with minus 9.5 percent for single- and two-family houses compared to the same quarter last year. Condominiums there became cheaper by an average of 4.6 percent. In sparsely populated rural areas, buyers paid an average of 6.7 percent less for single- and two-family houses and 2.4 percent less for condominiums than in the first quarter of 2023.
:Real estate prices in Munich are falling significantly
The official figures show that condominiums have become 13 percent cheaper in the last two years. But that is not the case for one part of town, where a square meter of land is worth more than anywhere else in Germany – 170,000 euros.
Since mid-2022, the peak of the years-long boom, the Real estate market is on the decline. The main reason is the sharp rise in interest rates, which has made loans more expensive. Many people can no longer afford their own home, and investments are no longer profitable for large investors. Experts expect that the decline in real estate prices will soon come to an end, but not that they will then rise sharply again.
At the same time, demand for housing remains high, particularly in cities, while new construction is in a slump due to rising interest rates and increased construction costs. The number of building permits for new construction and renovation of apartments in April was significantly lower than in the same month last year – around 17 percent less. Associations in the construction and real estate industry are calling for more state support in view of the housing shortage, particularly in urban areas.