DReal estate prices in Germany also fell in the fourth quarter of 2022. The trend reversal is thus solidifying, the Association of German Pfandbrief Banks (VDP) announced on Friday. According to the association, to which the most important German real estate financiers belong, prices fell by 2 percent from the third to the fourth quarter. It was the second quarter-on-quarter decline in a row.
Compared to the same quarter of the previous year, real estate prices increased by 0.8 percent. House prices rose 2.1 percent year-on-year while falling 1.8 percent quarter-on-quarter. Commercial real estate became cheaper both in a year-on-year comparison and in a quarterly comparison. Viewed over a twelve-month period, their prices fell by 4.4 percent compared to the third quarter by 2.9 percent.
“We are also expecting declines for the next few quarters – albeit at a moderate level overall,” said VDP CEO Jens Tolckmitt. The healthy general conditions of the German market should help to cope well with the current price correction phase. “Because even if prices were to drop by a total of 15 percent over a longer period of time, measured against the development of the overall index, we would be at the price level of the beginning of 2020.”
VDP President Georg Reutter, who is CEO of DZ Hyp in his main job, described rising interest rates as a headwind in the real estate business in December. The real estate market had taken a break, and the volume of transactions was noticeably declining, he said at the time. Reutter thought a drop in real estate prices of 15 to 25 percent was possible.