Ten-year spiral broken: Real estate prices are falling particularly in these regions

Created: 11/26/2022, 10:53 p.m

By: Lisa Mayerhofer

The prices for houses and apartments in Germany are currently falling, breaking a ten-year price spiral.

Which cities and districts are particularly affected.

Munich – After years of the real estate boom, a sharp turnaround is becoming apparent in Germany: According to data from the financing broker Interhyp, prices for houses and condominiums fell in the third quarter, bucking the general trend of high inflation.

According to this, the average price for a financed property including ancillary costs was EUR 512,000 in the third quarter – i.e. 4.3 percent less than in the second quarter.

Real estate prices: Rising interest rates deter potential buyers

According to Interhyp CEO Jörg Utecht, the main reason is that many people can no longer afford a house or apartment because of the rise in interest rates.

"The interest rate hikes due to the high inflation and the expectations of further monetary policy have quadrupled the building interest rates," said Utecht.

The evaluation is based on the real estate loans brokered by Interhyp from over 500 banks, building societies and other lenders.

This would have broken a ten-year price spiral: from the first quarter of 2012 to the first quarter of 2022, the nationwide average price of a residential property almost doubled from EUR 290,000 to EUR 540,000, according to Interhyp.

According to Interhyp, real estate prices had already fallen by 0.9 percent in the second quarter.

Various regions in Germany are affected by falling real estate prices.

(symbol photo) © Andreas Haas/Imago

Prices for apartments and houses are also falling in major German cities

An overview of transaction prices also suggests that prices are falling.

The real estate price index of the Association of Pfandbrief Banks (vdp), which brings together the most important German real estate financiers, slipped into the red for the first time since 2010 in the third quarter.

Apartments and houses became cheaper by 0.7 percent from August to October compared to the previous quarter.

"The more than twelve-year upward trend in residential property is over," said vdp CEO Jens Tolckmitt.

The German metropolises, which are otherwise so expensive in terms of real estate prices, are also giving way: According to the vdp, residential property in the seven largest metropolises was 0.7 percent cheaper.

While prices in Berlin hardly changed compared to the second quarter (minus 0.1 percent), they fell in the other major cities by between 0.6 percent (Cologne) and 1.5 percent (Munich).

According to experts, this downward trend could continue: According to the

, Interhyp board member André Lichner assumes that there will be price reductions of up to 15 percent in metropolises such as Munich, and even 20 to 25 percent in rural areas.

His board colleague Jörg Utecht told

: "The figures from the first weeks of the fourth quarter from Munich, Hamburg and Berlin show that further downward corrections are likely."

Evaluation: Which regions are particularly affected by falling real estate prices

But which regions are particularly affected?

The real estate portal immowelt.de analyzed this based on data from the purchase prices of the offers advertised on its platform.

The values ​​calculated using hedonic methods reflect the square meter prices of existing apartments (75 square meters, 3 rooms, 1st floor, built in the 1990s).

These are offer prices and not closing prices.

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In these counties and cities, real estate prices fell the most in October 2022 compared to the previous year:

The tables show that rural districts and cities that previously had high price levels are also affected.

It plays a role in the fact that higher purchase prices have an even greater impact on higher interest rates and make buyers hesitate.

Other counties are suffering from declining population numbers.

Market researchers: "The market has turned"

"There are indications that the market has turned around," says Stephan Kippes, the market researcher at the real estate association IVD Süd in Munich.

Gone are the days when apartments and houses for sale in cities were practically snatched out of the hands of realtors.

"The number of properties on the market has increased significantly," says Kippes - in some regions it has doubled.

"As a result, some sellers are willing to talk to you about the price."

With material from the dpa