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Germany sees record drop in property prices

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DPA/The Local - [email protected]
Germany sees record drop in property prices
New build homes in Sankt Augustin, North Rhine-Westphalia. Photo: picture alliance/dpa | Henning Kaiser

Prices for homes in Germany fell at a record level in the second quarter of this year, according to new figures.

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Apartments and houses fell in price on average by 9.9 percent in the second quarter of 2023 compared to the same period of 2022, the Federal Statistical Office said on Friday. It's the strongest year-on-year decline since records began in the year 2000.

Compared to the previous quarter of this year, however, the decline of 1.5 percent was smaller than in the two previous quarters. At that time, residential properties had fallen by 2.9 and 5.1 percent respectively compared to the previous quarter.

According to researchers, prices have been falling in Germany since their peak in the second quarter of 2022.

The main reason for the trend reversal in the real estate market after several boom years is the increase in building interest rates, which have made loans significantly more expensive. Added to this is stubbornly high inflation, which reduces people's purchasing power and means many people can no longer afford to buy property.

READ ALSO: Germany sees property prices drop in 14 major cities

Prices fell on average in both cities and rural regions in the second quarter of this year. However, they dropped more sharply in cities.

Single and family homes fell in price by 12.6 percent, and buyers were asked to pay an average of 9.8 percent less for apartments than a year before.

Significant declines compared to the same quarter of the previous year were recorded in Berlin, Hamburg, Munich, Cologne, Frankfurt am Main, Stuttgart and Düsseldorf. 

It comes as a study this week found that Frankfurt and Munich were no longer at risk of a housing bubble. 

According to the UBS Global Real Estate Bubble Index for 2023, only two cities - Zurich and Tokyo - out of a global ranking of 25 - are at risk of a housing bubble.

Frankfurt and Munich, which were in this category last year, have dropped to the lower-risk 'overvalued' group. 

READ ALSO: Where property prices are forecast to rise and fall in Germany

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Vocabulary 

Price decline - (der) Preisrückgang 

Residential property - (die) Wohnimmobilien

On average - im Schnitt/durchschnittlich 

Peak - (der) Höchststand

We’re aiming to help our readers improve their German by translating vocabulary from some of our news stories. Did you find this article useful? Let us know.

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