Real estate prices fall as sharply as not since 2007: the reasons – economy
At the end of last year, prices for residential real estate in Germany fell more sharply than at any time since 2007. The prices for apartments and one- and two-family houses fell in the fourth quarter by an average of 3.6 percent compared to the same quarter last year, as the Federal Statistical Office announced on Friday. Compared to the previous quarter, the decline was even clearer at minus 5.0 percent.
The statisticians in Wiesbaden wrote that the decline was more pronounced in the first quarter of 2007 than at the end of 2022, at minus 3.8 percent compared to the first quarter of 2006. “The decisive factor for the decline in purchase prices is likely to be a drop in demand as a result of increased financing costs and persistently high inflation.”
In the metropolises, the decline is much weaker
With the rapid rise in interest rates, the long boom seems to be on the German real estate market to have ground to a halt as credit has become so expensive. Looking at the whole of 2022, however, residential real estate prices still rose. In the first three quarters, prices were still around 5.3 percent compared to the previous year. In 2021, prices had risen by 11.5 percent more than in any previous year since the start of the time series in 2000.
According to the statistics, prices fell in the final quarter of 2022 in both cities and rural areas. The prices for single and two-family houses fell more than those for condominiums. In the seven metropolises of Berlin, Hamburg, Munich, Cologne, Frankfurt, Stuttgart and Düsseldorf, prices for single and two-family houses fell by 2.9 percent, and 1.6 percent less had to be paid for apartments.