Dhe prices for residential real estate fell at the end of 2022 for the first time in twelve years. From October to December, they fell by an average of 3.6 percent compared to the same period last year, as the Federal Statistical Office announced on Friday. This is the first drop since the end of 2010, when there was a 0.5 percent drop.
In the first quarter of 2007, purchase prices for apartments and detached and semi-detached houses had fallen even more sharply by 3.8 percent. Measured against the third quarter of 2022, prices fell by an average of 5 percent. “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,” the statisticians explained.
In 2022 as a whole, however, prices for residential real estate continued to rise, as there was still growth in the first three quarters: they rose by 5.3 percent on average over the year. In 2021, there was an increase of 11.5 percent, the strongest increase since the time series began in 2000.
Differences between town and country
At the end of the year, declines were mostly recorded in both cities and rural areas. “The prices for one- and two-family houses fell more than those for condominiums,” according to the statisticians.
For example, detached and semi-detached houses in the urban districts were 5.9 percent cheaper than in the same quarter of the previous year. In contrast, prices for condominiums in these cities fell by only 1 percent.
In the sparsely populated rural districts, detached and semi-detached houses were 5.5 percent cheaper, while condominiums were slightly more expensive at 0.1 percent. In the metropolises of Berlin, Hamburg, Munich, Cologne, Frankfurt am Main, 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.
According to the Bundesbank, the overvaluations in residential real estate prices continued last year. In the cities, house prices in 2022 were still between 25 and 40 percent above the justified level, as their economists found.