Fears of a housing crisis in Germany are growing. But new data points to a surprising turnaround: house prices are falling.
Bonn/Berlin – High rents, gentrification and too little housing construction: Affordable housing has been scarce in Germany for years. The coronavirus pandemic, historically high inflation and rising interest rates are fuelling fears of a worsening housing crisis. And so the prices for real estate in Germany have only known one direction in recent years. And that was called: steeply upwards. But, as much as low interest rates and Germans' propensity to buy have driven up prices, they now seem to be collapsing again.
Real estate prices are plummeting: This is how devastating it really looks on the housing market
This is the result of a new real estate index launched by scientists at the University of Bonn. According to data from the "GREIX" index – the German Real Estate Index – prices for one's own four walls have collapsed by up to 20 percent since the middle of last year, adjusted for inflation. Consumers in Germany are currently extremely worried about their retirement provision. Will everything be gone soon?
Fears of a housing crisis in Germany are growing. But new data points to a surprising turnaround: house prices are falling. © Nicolas Armer/dpa/Archive
In the first quarter of 2023 alone, purchase prices for houses, apartments or land in Berlin fell by six percent compared to the peak in 2022. In Frankfurt, the minus was twelve, in Hamburg nine percent, according to the researchers at the presentation of the German Real Estate Index in Berlin.
Real estate prices in conurbations are collapsing: GREIX database provides insight into price development
The new database "GREIX" is also intended to give private individuals free insight into price developments in 18 cities. "The regional real estate price database makes an important contribution to the transparency of real estate prices in Germany's largest cities," said Construction Minister Klara Geywitz (SPD). This can help to determine the value of one's own property or to compare prices when buying.
What is the new German Real Estate Price Index – GREIX for short?
How have real estate prices in Germany developed over the past 60 years? And what conclusions can be drawn from this for the future? The German Real Estate Price Index (GREIX), developed by economists from the Cluster of Excellence ECONtribute and the University of Bonn, provides answers and sets new standards for the analysis of German real estate markets based on the latest data.
For the first time, the GREIX provides a highly up-to-date picture of the price development of the real estate markets in 18 German cities since the 1960s, down to the level of individual city districts. With the help of the data set, long-term trends in the real estate markets can be analysed and current developments such as the surge in inflation can be placed in a historical context. Although there is a lot of data on real estate prices in Germany, it has so far only been possible to paint an unclear picture of the real estate market.
Researchers from the Cluster of Excellence ECONtribute: Markets & Public Policy and the University of Bonn have joined forces with expert committees (GAAs) throughout Germany to systematically analyze the development of real estate prices. With the GREIX, ECONtribute is now creating a platform that makes this possible – centrally available and free of charge. Via a website, real estate prices can be transparently compared over the entire period down to the level of individual districts. The database is a significant step forward towards more transparency in the German real estate market and makes it possible to analyse the German real estate market in an up-to-date manner and with the highest scientific standards. Source: Federal Ministry of Housing, Urban Development and Building
German Real Estate Price Index (GREIX): Real estate boom slumps again after around 12 years
Information from the so-called expert committees from the past 60 years was fed into the database. According to the developers at the University of Bonn, long-term trends can be identified from this. For example, real estate prices continued to rise before German reunification, then collapsed until a new real estate boom began in 2010. Since mid-2022, prices have collapsed due to inflation and rising interest rates.
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The new instrument was developed by the Cluster of Excellence ECONtribute at the University of Bonn. But real estate prices are not falling everywhere in Germany. In some regions, they continue to rise, as can be seen from the Postbank Housing Atlas.