After noticeable declines, the prices for residential real estate in Germany are hardly falling any more. This is shown by new figures from the Association of German Pfandbrief Banks (vdp), which represents the most important real estate financiers in Germany.
According to the vdp real estate price index, apartments and houses were only 0.9 percent cheaper in the second quarter compared to the first quarter. Compared to the same quarter of the previous year, however, there was an average minus of 5.4 percent, reported the association, which represents Deutsche Bank, Commerzbank and large savings banks, among others. "The downward momentum in real estate prices has eased noticeably," it said.
In the case of owner-occupied residential property, prices fell only slightly in the second quarter (minus 0.4 percent compared to the previous quarter), while the discounts for apartment buildings were somewhat larger. "There are signs of stabilization on the residential real estate market," said vdp general manager Jens Tolckmitt of the German Press Agency. One reason is that construction interest rates have recently leveled off at an elevated level. "There is increasing confidence in the market that long-term lending rates will not rise much further."
reason for the price drop
The main reason for the recent drop in real estate prices is the sharp increase in interest rates on loans, which make financing more expensive. According to the Federal Statistical Office, in the first quarter houses and apartments had become cheaper by an average of 6.8 percent compared to the same quarter of the previous year and by 3.1 percent compared to the previous quarter. Official data for the second quarter are still pending.
According to the study, residential real estate prices in the seven major cities fell by an average of 1.1 percent quarter-on-quarter and by 5 percent year-on-year. The smallest discounts were in Berlin with minus 3.6 percent within a year. The highest price declines were recorded in Frankfurt (minus 9.1 percent), Munich (minus 6.7) and Hamburg (minus 6.4). Only in Düsseldorf did prices rise minimally (plus 0.1).
The vdp index is based on data on real estate transactions from more than 700 banks and is more meaningful than analyzes based on advertisements. Because the sale of real estate is negotiated and deviations from the asking price are common.
New contract rents are rising significantly
Meanwhile, the upward pressure on the rental market continued, to which many people are forced to turn. New contract rents rose sharply in the second quarter by 6.2 percent compared to the same quarter of the previous year. "The demand for housing remains high," said Tolckmitt. Berlin was at the top of the metropolises with an increase of 9.5 percent within a year. "Tolckmitt has said that too few apartments have been built in Berlin for years compared to the number of people moving in.
According to vdp calculations, the price declines in commercial real estate were again particularly large at minus 10.3 percent compared to the same quarter of the previous year and minus 2 percent compared to the previous quarter. While the trend towards working from home is having a negative impact on office properties, retail is suffering from online shopping and consumer restraint in the face of inflation.