Residential real estate in Germany became cheaper at the beginning of the year than it has been since 2000. In the first quarter of 2023, prices fell by an average of 6.8 percent compared to the same quarter of the previous year, as the Federal Statistical Office announced on Friday in Wiesbaden.
It was the sharpest decline within a year since the start of the time series in 2000. Compared to the fourth quarter of 2022, residential real estate was 3.1 percent cheaper on average.
As early as the fourth quarter of 2022, the authority had identified noticeable price declines after years of the real estate boom. The main reason for the turnaround on the real estate market is the sharp rise in construction interest rates, which have made loans much more expensive. Added to this is persistently high inflation, which is reducing people’s purchasing power. Many people can no longer afford to buy real estate. The banks’ new business with residential real estate loans to private individuals has been on the ground for months, in April it collapsed again by around half, according to Bundesbank data.
According to the information, prices fell at the beginning of the year in both cities and rural areas. They declined more in the cities. The largest declines compared to the same quarter of the previous year were recorded in Berlin, Hamburg, Munich, Cologne, Frankfurt am Main, Stuttgart and Düsseldorf. Here, detached and semi-detached houses became cheaper by 10.4 percent, and 6.4 percent less had to be paid for apartments than in the first quarter of 2022.
