After a sharp decline last year, real estate prices in Germany have recovered somewhat. However, there are clear differences depending on the region and type of housing.
The prices for apartments and houses in Germany have stabilized slightly again after significant declines. The prices for residential real estate still fell by 2.6 percent between April and June compared to the previous year, as the Federal Statistical Office announced.
However, prices rose slightly compared to the previous quarter – by 1.3 percent. “This is the first quarter-on-quarter increase since Q2 2022,” the agency wrote. However, there are clear regional differences. While the prices for apartments in sparsely populated rural regions continue to decline, single- and two-family houses have become more expensive on average in all types of regions.
Large cities with moderate growth
In the seven largest German metropolises – Berlin, Hamburg, Munich, Cologne, Frankfurt, Stuttgart and Düsseldorf – prices rose by 1.6 percent for apartments and 2.3 percent for single- and two-family houses in the second quarter of 2023 compared to the previous quarter.
Compared to the previous year, however, prices continue to be lower: apartments are still 1.5 percent cheaper and houses four percent cheaper than in the same quarter last year. Prices on the real estate market have cooled significantly since mid-2022. At that time, the year-long boom reached its peak – prices have fallen sharply since then.
Loan interest as the main cause
On average, houses and apartments will be 8.5 percent cheaper in 2023 compared to the previous year. The Kiel Institute for the World Economy (IfW) spoke of the strongest price decline in around 60 years. In the first quarter of this year, prices had fallen by 5.7 percent compared to the same quarter last year.
The main reason for the end of the real estate boom was increased loan interest rates. Many people can no longer afford their own four walls, and sellers have to lower their prices. In the last few months, however, the situation has eased somewhat: building interest rates have fallen and properties have become somewhat more affordable again.
