The housing boom in Germany is over, and real estate prices have fallen for the first time in more than a decade, writes Bloomberg.
According to data published by mortgage technology company Europace AG, the cost of housing in December 2022 decreased by 0.8% compared to the same month last year. This is the first decrease in the monthly price index since 2009.
The fall in housing prices shows how much the situation in the German real estate market has changed after the European Central Bank began raising interest rates last year, thereby canceling a decade of low and even negative rates. The consequence of these measures was that the cost of mortgage loans doubled or even tripled, and many consumers left the housing market.
According to the ECB, the volume of new loans for the purchase of apartments and houses in Germany for four months after the first increase in interest rates since 2011 (in July 2022) fell by 30%. Since then, the central bank has increased rates three more times, raising the rate on deposit loans from 0.5% to the current 2%.