Why are property prices in Germany experiencing a significant decline?

The primary reason for the sharp decline in German property prices is the recent increase in interest rates. The European Central Bank's decision to raise its key interest rate to 4.5 percent has led to a noticeable shift in the real estate market, making mortgages more expensive and impacting the affordability of properties for potential buyers.

How do major cities in Germany fare in the current real estate downturn?

Major cities, including Düsseldorf, Stuttgart, Frankfurt, Hamburg, and Munich, are witnessing substantial declines in property prices. The study reveals that condominium prices in cities like Düsseldorf and Stuttgart have fallen by over 15 percent, contributing to the overall average decline in the seven largest cities surveyed. Only Cologne experienced a slight rise of 1.1 percent in apartment prices.

What is the broader impact of the property market downturn on new construction and the economy?

The decline in property transactions, indicated by around a third fewer sales compared to the previous year, has broader implications. Institute President Moritz Schularick notes that the diminishing number of buyers and sellers engaging at current prices is bad news, particularly for the new construction business. This not only affects the economy but also poses challenges for Germany as a business location, which requires new living spaces to attract locally mobile skilled workers.

Residential property analysis

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AdminJune 27, 2024

Sharp Decline in Property Prices in Germany

Sharp Decline in Property Prices in Germany In a recent analysis conducted by the Kiel Institute for the World Economy…
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