Despite hopes for a possible stabilization of the real estate market, recently published studies show a continuous price decline for houses and apartments. According to the Association of German Pfandbrief Banks (VDP), which represents prominent financial institutions such as Deutsche Bank, Commerzbank, Landesbanks and large savings banks, residential real estate prices fell on average by 1.7 percent in the third quarter compared to the previous quarter. Compared to the same period last year, the decrease even amounts to 6.3 percent.
These figures, based on data from more than 700 banks, illustrate that the hoped-for stabilization of the real estate market is taking longer than expected. The decline in prices thus continued for the fifth quarter in a row. There were also again significant price reductions for commercial properties, as emphasized by the CEO of VDP, Jens Tolckmitt.
The main reason for the downward trend are the increased purchasing costs and interest rates, which make loans more expensive. This fact leads to a lower demand for construction financing. Compared to the previous year, the Federal Statistical Office recorded a surprisingly strong decrease of almost ten percent in residential real estate - the largest since the year 2000. Official figures for the third quarter are still pending.
In Germany's seven largest cities, where living space is particularly scarce, the price decline was slightly less at 1.3 percent compared to the previous quarter and 5.7 percent compared to the same period last year. However, the picture is not consistent, as while Frankfurt am Main saw the largest price decrease (9.1 percent), the decline in Berlin was relatively moderate at 4.7 percent. Düsseldorf, Hamburg, Cologne, Munich, and Stuttgart saw decreases between 5.1 and 6.8 percent.
Meanwhile, the strong upward pressure on the rental market continues, which many people are avoiding. According to Tolckmitt, new contract rents increased by 5.8 percent in the third quarter compared to the previous year. This is due to the ongoing shortage of living space and the resulting excess demand.
However, the situation for commercial real estate is less positive. According to calculations by VDP, there were again significant price decreases, particularly in the office (minus 10.6 percent) and retail real estate sectors (minus 9.3 percent). The trend towards home office as well as stricter energy requirements burden the office market, while retail properties suffer from the trend towards online trading and the generally restrained willingness to consume in times of inflation.
