German residential property values drop by 5.7% during the first quarter.
Real estate prices in Germany experienced a persistent drop, especially in residential properties, post the substantial decrease recorded in 2023. Per the Federal Statistical Office, during Q1 2024, prices dipped by an average of 5.7% compared to the same period in 2023. This decline was even more astronomical, ranging from 6.6% to 10.2%, in the previous four quarters. The price decrease in Q1 2024 was marked at 1.1%.
The dismal trend continued throughout 2023, with a staggering 8.4% drop in property prices - the sharpest decline since the advent of statistics in the year 2000. Financing costs and exorbitant construction materials are identified as the primary culprits behind this slide. Experts forecast an ongoing reduction in residential real estate prices in 2024, with an average decline of 2.0%. On a positive note, they predict a recovery with a 2.0% growth in prices in 2025, according to a Reuters survey of 13 real estate analysts.
A substantial price drop was observed in both urban centers and rural areas. In the top 7 metropolitan areas (Berlin, Hamburg, Munich, Cologne, Frankfurt/Main, Stuttgart, and Düsseldorf), prices for single-family and two-family homes dropped by 9.5%, while apartment buildings saw a 4.6% decrease. In large cities outside the metropolitan areas, the prices for single-family and two-family homes fell by 7.3%, and apartments by 3.5%. The statisticians reported an overall decreasing trend in prices in other regions as well. In sparsely populated rural districts, single-family and two-family homes were 6.7% cheaper, and apartments were 2.4% cheaper.
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The decline in residential real estate prices in Germany wasn't confined to the first quarter, as they continued to be cheaper in the subsequent quarters as well. In fact, prices for single-family and two-family homes in urban areas fell by as much as 9.5% in the top 7 metropolitan areas. Conversely, even in sparsely populated rural districts, these types of homes became 6.7% cheaper during this period. With experts predicting an average 2.0% reduction in residential real estate prices in 2024, it seems that the price decrease in the real estate market is far from over.
