Housing prices in Germany have been declining for four consecutive quarters. In the 3rd quarter of 2023, they fell by 10.2% compared to the same period in 2022. This is the largest decrease since the German statistical office began keeping records, that is, since 2000.
"Until 2022, a speculative price bubble was growing in Germany, one of the largest in the last 50 years," said Konstantin Kholodilin from the macroeconomics department of the German Institute for Economic Research (DIW). "Now prices are falling. The bubble burst.
For many years, the real estate sector in Germany and other European countries has flourished as interest rates have been low and demand has been high. But a sharp rise in mortgage rates and construction costs put an end to this, putting developers at risk of insolvency.
In the 3rd quarter, a decrease in the cost of single- and two-family homes was especially noticeable in large German cities. It was 12.7%. Apartment prices fell by 9.1%.
A source: Reuters
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