Rising interest rates and construction costs have plunged the real estate market into crisis. Home builders held back on projects. Now there are increasing signs that the worst may be over.
Banks in Germany are again issuing significantly more real estate loans – especially for apartments and houses. In the second quarter, the banks that are members of the Association of German Pfandbrief Banks (VDP) provided financing totaling a good 31 billion euros – 15.6 percent more than in the comparatively weak period of the previous year.
This means that new business has reached its highest level since the third quarter of 2022, said the association, which represents the most important real estate financiers in Germany, including Deutsche Bank, state banks and large savings banks.
Financing for residential properties in particular was in greater demand again: the loan volume rose to 20.1 billion euros in the second quarter – an increase of one third, albeit from a low level. More loans were granted, especially for single- and two-family homes, but also for condominiums.
“Demand for home ownership is increasing again”
By contrast, there was no recovery in new business in commercial real estate, where the office market in particular is in crisis. Here, the loan volume fell by almost seven percent to around eleven billion euros.
“The growing financing volume reflects the noticeably increased demand for home ownership,” said Jens Tolckmitt, CEO of the VDP. He sees signs that the crisis on the real estate market is coming to an end. The VDP recently noted a stabilization of prices for the second quarter.
Previously, sharply rising interest rates and construction costs had triggered a real estate crisis. According to the Federal Statistical Office, prices for houses and apartments in Germany fell by 8.4 percent in 2023 – the sharpest year-on-year decline since the time series began in 2000.
Source: Stern
