In the first quarter of 2023, prices fell by an average of 6.8 percent compared to the same quarter of the previous year, the Federal Statistical Office recently announced.
It was the sharpest decline within a year since the start of the time series in 2000. Compared to the fourth quarter of 2022, residential real estate was 3.1 percent cheaper on average.
As early as the fourth quarter of 2022, the Federal Office had identified noticeable price declines after years of increases. The main reason for the turnaround on the real estate market is the sharp rise in construction interest rates, which have made loans much more expensive. Added to this is persistently high inflation, which is reducing people’s purchasing power. Many people can no longer afford to buy real estate. Banks’ new business with residential real estate loans to private customers has been under pressure for months. According to Bundesbank data, it fell again by around half in April.
Stronger decline in cities
According to the analysis, there were price declines in all cities and regions. The largest declines compared to the same quarter of the previous year were recorded at the beginning of the year in Berlin, Hamburg, Munich, Cologne, Frankfurt am Main, Stuttgart and Düsseldorf. Here, detached and semi-detached houses became cheaper by 10.4 percent, and 6.4 percent less had to be paid for apartments than in the first quarter of 2022.
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