Houses and apartments are getting cheaper, and not only in rural areas – according to the largest financiers, turmoil in the real estate market continues into the first quarter of 2023. The capital, however, is an exception.
According to the survey, residential property prices in Germany continue to decline markedly, especially in Frankfurt. According to the new real estate price index of the Association of German Pfandbriefbanken (VDP), in the first quarter, apartments and houses fell by an average of 2.1% compared to the same period last year. Compared to the fourth quarter of 2022, prices fell by 2%, according to the association, which represents the most important financial institutions in Germany, including Deutsche Bank, Commerzbank, Aareal Bank, state-owned banks and large savings banks.
The figures show that the turmoil in the real estate market continues after more than a decade of boom. The price cuts affected both owner-occupied residential properties and apartment buildings, the assessment said. Including commercial real estate, the real estate price index fell 3.3% year-over-year, the sharpest decline since records began in 2003, the VDP said. “There are still relatively few deals,” said Jens Tolkmitt, chief executive of VDP. “Sellers and buyers are still looking for a new price balance.”
“A real shortage of living space”
The association expects prices to decline in the coming quarters. At the same time, pressure on rents under new contracts remains high. “There is still a real shortage of housing,” Tolkmitt said. In the seven largest cities in Germany, the decline in residential property prices in the first quarter was less than the national average. In metropolitan areas, prices fell 1.4% year on year and 1.3% quarterly. Only in Berlin apartments and houses rose in price by 1.0% year on year, while compared to the previous quarter prices fell slightly (minus 1.3%). Property prices fell the most in Frankfurt am Main, down 6.4% year on year and down 2.2% compared to the fourth quarter of 2022. Hamburg, Düsseldorf, Cologne, Stuttgart and Munich were in an intermediate position, with price declines ranging from 2.3% to 3.8% year-on-year.
The VDP index is based on real estate transaction data from over 700 banks. The main reason for the fall in real estate prices is the sharp rise in interest rates, which makes loans more expensive. According to the VDP, prices for commercial real estate fell especially sharply. Prices for offices fell by 7.5% over the year, and for retail real estate – by 10.5%.
Official data for the first quarter of this year has not yet been released.
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Source: Все материалы – Московский Комсомолец by www.mknews.de.
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