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Rarity these days: new home construction
Photo: Jan Woitas/dpa
The prices for houses and apartments fell more sharply last year than at any time since the turn of the millennium. Residential properties in Germany fell on average by 8.4 percent compared to the previous year, the Federal Statistical Office announced on Friday. "This was the largest year-on-year decline since the time series began in 2000 and the first decline since 2007."
The decline continued at the end of the year: in the fourth quarter of 2023, according to the Wiesbaden statisticians, prices fell by 7.1 percent compared to the same period last year and by 2.0 percent compared to the previous quarter. In a year-on-year comparison, existing properties fell significantly more in price at 7.8 percent than new buildings (minus 3.2 percent).
Prices were collapsing in both cities and rural areas, the statisticians explained. In urban districts, the price decline for single- and two-family homes in the fourth quarter was particularly large at eleven percent compared to the same quarter of the previous year. In the seven metropolises - Berlin, Hamburg, Munich, Cologne, Frankfurt, Stuttgart and Düsseldorf - the prices for single and two-family houses fell by an average of 9.1 percent within a year at the end of the year, and condominiums cost 5.8 percent less.
The real estate market has been going downwards since mid-2022, the peak of the year-long boom. According to estimates by the Kiel Institute for the World Economy (IfW), there was the sharpest price decline in residential real estate in Germany in around 60 years in 2023.
The main reason is the sharp rise in interest rates, which has made loans much more expensive. Many people can no longer afford their own four walls and investments are no longer worthwhile for large investors. At the same time, demand for living space remains high, especially in cities, while new construction is in crisis due to rising interest rates and expensive materials.
mik/dpa AFX