2023-09-22 14:42:03
There had been some discussions in the real estate industry as to whether the extraordinary fall in house prices in Germany had continued. Now it’s official: The Federal Statistical Office, whose house price index figures are always published with a slight delay after many figures from the real estate industry, is reporting a further decline in residential property prices for the second quarter. Both compared to the same quarter last year and the previous quarter. Only the “dynamics” of the price decline, i.e. the extent of the percentage change compared to the previous quarter, has recently declined.
Compared to the same period last year, prices fell by an average of 9.9 percent. According to the office, this was a new record, the strongest annual decline since the time series began in 2000. Compared to the previous quarter, prices fell by another 1.5 percent. However, this was a smaller further decline than in the previous two quarters: in the first quarter of this year the decline compared to the previous quarter was 2.9 percent – in the last quarter of last year it was 5.1 percent. This could be a sign that the price decline is slowly easing somewhat.
What happens next? After an analysis, Commerzbank recently estimated that prices were likely to fall even further. There is still a need for correction in the “high single-digit” or “low double-digit” percentage range. The bank UBS had expressed the fear, particularly for Germany’s banking metropolis of Frankfurt, that it was not over yet – and also pointed to Germany’s weak overall economic development, as well as the purchase prices that had exceeded income and rents in recent years. Out of frustration with the federal government’s policy, the Federal Association of German Housing and Real Estate Companies (GdW) and the owners’ association Haus & Grund have canceled their participation in the planned “housing construction summit” this Monday in the Chancellery.
Old houses in cities are tricky
Not all property prices fall the same. The Federal Statistical Office has differentiated this. Remarkably, the price declines were lowest in sparsely populated rural districts. Condominiums here were 7 percent cheaper than a year ago. Single- and two-family homes cost 8.1 percent less. Compared to the first quarter of 2023, prices for condominiums in sparsely populated districts fell by 2.1 percent, while prices for single- and two-family homes even rose slightly on average by 0.7 percent. Where prices did not rise as much during the boom, they are not falling as much now.
This shows that this is an issue particularly in large cities. And older buildings also seem to be disproportionately affected by the drop in prices due to the debates about energy-efficient renovation.
The Federal Statistical Office reported an annual price decline of 12.6 percent for one- and two-family houses in the seven most important German cities, including Berlin, Hamburg, Munich, Cologne, Frankfurt, Stuttgart and Düsseldorf. This is relatively high compared to the other categories and regions. Condominiums in these cities fell in price by 9.8 percent over the year. Compared to the first quarter of this year, prices in large cities continued to fall in both segments.
#record #fall #house #prices