Post a Comment Print Share on Facebook
Featured Italia Elche Drones Banco Santander BBVA

Real estate prices in Germany suffered a record drop in the fourth quarter of 2023

MADRID, 12 Feb.

- 2 reads.

Real estate prices in Germany suffered a record drop in the fourth quarter of 2023

MADRID, 12 Feb. (EUROPA PRESS) -

The adjustment of the German real estate market intensified in the fourth quarter of 2023, when prices decreased on average by 7.2% year-on-year, the largest drop in the entire historical series of the index prepared by the VDP banking association, with a particularly deep in the commercial segment.

"2023 was a difficult year for the real estate sector, as we can see from the price developments. There were no signs of recovery in the fourth quarter either," said VDP CEO Jens Tolckmitt. "A reversal of the trend in real estate prices is not yet in sight. The situation will remain difficult for the time being in 2024," he added.

The year-on-year drop of 7.2% in the fourth quarter represents a deterioration in prices one tenth greater than between July and September and the fourth consecutive drop in the data, which thus stood 10% below the maximum reached in the second quarter 2022. In the quarterly comparison, prices decreased by 2.2% between October and December.

In the case of residential property prices, they fell 6.1% year-on-year in the fourth quarter of 2023, after the 6.3% decline in the third quarter, and 1.6% quarter-on-quarter. Compared to the peak in the second quarter of 2022, residential property prices in Germany are down 8.4% after more than doubling in the previous twelve years.

For its part, commercial property prices decreased by 12.1% year-on-year and 4.9% quarter-on-quarter in the last quarter of 2023, which are the largest price drops ever recorded in the VDP commercial property index.

This represents a decline of 16.5% since prices peaked in the second quarter of 2022, following an increase of around 55% between 2010 and 2022.

"The real estate crisis is affecting the commercial segment more than the residential segment. Currently, the focus is on office properties, whose profitability so far has generally not met investors' expectations," Tolckmitt said.

Furthermore, the VDP director noted that office demand remains weak due to uncertain economic growth in Germany and the still unclear impact of the teleworking trend on needed office space, "so prices continue to fall."

Thus, the expert warned that it will take some time before property buyers and sellers reach a new price equilibrium, adding that prices can be expected to stabilize in the residential real estate market by the summer, but not before at the end of the year in the commercial segment.