Residential real estate in Germany became cheaper at the end of last year than it has been since 2007. The prices for apartments and one- and two-family houses fell in the fourth quarter by an average of 3.6 percent compared to the same quarter last year, as the Federal Statistical Office announced on Friday. Compared to the previous quarter, the decline was even clearer at minus 5.0 percent.

In the first quarter of 2007, the purchase prices for residential real estate fell more sharply than at the end of 2022, at minus 3.8 percent compared to the first quarter of 2006, according to the statisticians in Wiesbaden. "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."

With the rapid increase in interest rates, the long boom on the German real estate market has come to a standstill because loans have become so expensive. In 2022 as a whole, however, prices for residential real estate rose by 5.3 percent compared to the previous year due to growth in the first three quarters. In 2021, prices had risen by 11.5 percent more than in any previous year since the start of the time series in 2000.

According to the statistics, prices fell in the final quarter of 2022 in both cities and rural areas. The prices for single and two-family houses fell more than those for condominiums. In the seven metropolises of Berlin, Hamburg, Munich, Cologne, Frankfurt, 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.