After more than ten years of real estate boom, houses and apartments have been getting cheaper in many places for months. Germany's major cities are also affected – with one exception.
Berlin – The long-standing upward trend in real estate prices in Germany is reversing: According to the most important financiers, prices for residential real estate in Germany continue to fall noticeably. In the first quarter, apartments and houses fell by an average of 2.1 percent compared to the same period last year, according to the real estate price index published on Wednesday by the Association of German Pfandbrief Banks (vdp). Compared to the fourth quarter of 2022, prices fell by 2.0 percent, according to the association, which represents the most important real estate financiers in Germany, including Deutsche Bank, Commerzbank, Aareal Bank, Landesbanken and large savings banks.
Real estate: "Sellers and buyers are looking for a new price equilibrium"
The figures show that the upheaval in the real estate market continues after more than ten years of boom. Both owner-occupied residential property and apartment buildings were affected by the price decline, according to the evaluation, which was available to the German Press Agency. Including commercial real estate, the real estate price index fell by 3.3 percent compared to the same period last year – the sharpest decline since records began in 2003, the vdp announced.
Even in Germany's largest cities, a decline in the price of residential real estate was recorded in the first quarter. (Symbolic image, Frankfurt am Main) © blickwinkel/Imago
"There are still comparatively few transactions," said vdp Managing Director Jens Tolckmitt. "Sellers and buyers continue to look for a new price equilibrium." The association also expects prices to fall in the coming quarters. At the same time, the pressure on new contract rents remains high. "There is still a real shortage of housing," Tolckmitt said.
Real estate prices are also falling in Germany's metropolises
Even in Germany's largest cities, a decline in the price of residential real estate was recorded in the first quarter. In the metropolises, prices fell by 1.4 percent year-on-year and 1.3 percent quarter-on-quarter. Only in Berlin did apartments and houses rise by 1.0 percent year-on-year, while prices fell slightly compared to the previous quarter (-1.3 percent).
Real estate prices fell most sharply in Frankfurt, down 6.4 percent year-on-year and 2.2 percent compared to the fourth quarter of 2022, while Hamburg, Düsseldorf, Cologne, Stuttgart and Munich lagged behind with year-on-year declines of 2.3 to 3.8 percent.
Study: Where it is worthwhile to move from the city to the surrounding area
In all seven metropolises, the proportion of the population aged 30 to 50 shrank, especially Frankfurt, Stuttgart, Munich and Cologne. This is suggested by a study by the German Economic Institute together with the Allensbach Institute on behalf of the Sparda banks. The researchers conclude that young families are more likely to move to the surrounding countryside and the countryside, where ownership is cheaper.
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As a result, prices have risen more sharply since 2017 in the surrounding areas of six of the seven metropolises than in the city itself. This can be seen most strongly in Berlin and Hamburg. Only in Frankfurt am Main is the trend balanced.
According to the study, however, moving from the metropolis to the surrounding area is particularly worthwhile in Düsseldorf, Frankfurt and Hamburg, where buying real estate in the suburbs is still 40 to 45 percent cheaper than in the city. In the surrounding areas of Berlin and Cologne, you save about a third. Around Stuttgart and Munich, on the other hand, houses and condominiums are now so expensive that you save less than a fifth.
With material from dpa
