The downward trend in German property prices in spring has been temporarily halted according to the barometer
The nearly two-year decline in German real estate prices appears to have temporarily halted, according to an industry barometer. The real estate price index of the Association of German Pfandbrief Banks (vdp) reached 175.5 points in the second quarter, 0.5 percent above the value of the first quarter.
"Prices seem to have adjusted to the point where the yields achieved meet the expectations of investors in the new interest and valuation environment," emphasized vdp CEO Jens Tolckmitt. However, he does not expect a noticeable short-term increase in real estate prices: "We assume that the emerging sideways movement will continue for several quarters."
The index, compiled quarterly by the association, is based on an analysis of real estate transaction data from over 700 credit institutions. According to the vdp, it covers price developments in the entire German market for residential, office, and retail properties.
Like the overall index, the barometer for residential real estate prices also recorded a slight increase of 0.5 percent compared to the previous quarter. "For the first time since the second quarter of 2022, residential real estate prices did not decrease in the quarterly comparison," the vdp announced further.
Between the first and second quarters, prices for multi-family homes and owner-occupied housing each increased by 0.5 percent. The prices in both sectors also developed nearly parallel on an annual basis, but with negative signs.
While multi-family homes were 2.8 percent cheaper compared to the same period last year, the decline in prices for single-family homes and condominiums was 3.0 percent. Both developments contributed to the overall decline in residential real estate prices from the second quarter of 2023 to the second quarter of 2024 by 2.9 percent.
The spring season might bring a promising change to the residential real estate market, given the stable prices recorded in the second quarter. The spring bloom is reflected in the fact that residential real estate prices did not decrease for the first time since the second quarter of 2022.
