WIESBADEN (dpa-AFX) - Prices for apartments and houses in Germany have fallen more sharply in the space of a year than at any time since the year 2000. According to data from the Federal Statistical Office on Friday, residential property fell in price by an average of 9.9 percent in the second quarter compared with the same period last year. It was the strongest minus since the beginning of the time series in 2000. A sweeping trend reversal after the end of years of real estate boom experts do not expect for the time being.

Compared with the previous quarter, however, the decline of 1.5 percent was less than in the two previous quarters. At that time, residential property prices had fallen by 2.9 and 5.1 percent respectively compared with the previous quarter. Since the peak in the second quarter of 2022, prices have been falling compared with the previous quarter, according to the statisticians.

For buyers this is actually a reason for joy. However, many people can no longer afford to buy their own four walls because the sharp rise in construction interest rates has made loans much more expensive. In addition, high inflation is reducing people's purchasing power. The lower prices are bitter for property owners who, for example, had hoped to gain a substantial additional income in old age by selling their property.

Huge uncertainty

According to an analysis by mortgage broker Interhyp, many prospective real estate buyers have buried the desire for their own home for the time being. "There is a gigantic uncertainty, said Vorständin Mirjam Mohr recently.

Also the Hamburg Gewos institute stated recently a further pronounced purchase restraint. "At present, we do not see any significant changes in the market-determining factors for the rest of the year," said Gewos expert Sebastian Wunsch.

Based on the deals registered at the half-year point, the institute expects only around 591,800 purchase cases. That would be just under a quarter fewer deals than in the already weak year 2022 - and the lowest value since the beginning of the all-German time series in 1995. At least a stabilization is expected in purchase prices at the end of the year.

The Association of German Pfandbrief Banks (vdp) recently took a similar view. "There are signs of stabilization in the residential real estate market," said vdp CEO Jens Tolckmitt. "There is growing confidence in the market that long-term lending rates will not rise much further."

Sales in major cities slump

Prices fell on average in both cities and rural areas in the second quarter. They fell more sharply in cities. Particularly sharp year-on-year declines were recorded in Berlin, Hamburg, Munich, Koln, Frankfurt am Main, Stuttgart and Düsseldorf. Here, the price of detached and semi-detached houses fell by 12.6 percent, while buyers had to pay an average of 9.8 percent less for apartments than a year earlier.

According to the Kiel Institute for the World Economy, buyers and sellers in the seven metropolitan areas are holding back considerably. Compared to the boom in 2021, the number of condominiums sold is currently more than half lower in a quarterly comparison, according to the report. "The trend is particularly dramatic in the new construction sector, where the number of sales has crashed by over 80 percent."

Demand for housing remains high

At the same time, demand for housing remains high, not least because of immigration, while new construction is faltering due to higher interest rates and expensive building materials. Germany's largest housing company Vonovia, for example, put the construction of tens of thousands of planned apartments on hold for the time being.

Ahead of Monday's housing summit at the Chancellor's Office, associations called on the German government to act quickly. "Further rising interest rates and ever-higher construction costs make for a toxic mixture," said Andreas Mattner, president of the German Property Federation (ZIA). More planning and financial leeway for the real estate sector is important, he added. The German Construction Industry Association called for "the government to act immediately and create investment impetus for residential construction."

The Federal Association of German Housing and Real Estate Companies (GdW) and the owners' association Haus & Grund accused the federal government of ignoring the industry's note and demands and rejected the summit./mar/DP/stw