In the second quarter of this year, house prices in Germany fell by 9.9% year-on-year. This is the sharpest fall in prices since data recording began in 2000.

Prices fell by 1.5% during the second quarter of 2023. The impact was particularly pronounced in large cities such as Berlin, Hamburg, and Munich, where apartment prices fell by 9.8% and single and two-family homes by 12.6%.

The main factors behind this decline were high-interest rates and rising construction costs. This led to some real estate developers facing financial difficulties, and many transactions were put on hold. As a result, it became possible to buy German real estate at a lower price.

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An additional factor that has had an impact on the real estate market is the reduction in building permits for apartments in Germany. According to the statistical office, this decrease amounted to 31.5% in July compared to the previous year. Germany aims to build 400,000 apartments per year but is currently struggling to reach this target.

The housing industry association GdW expressed concern about the situation and called for government support for construction companies. It proposed to reduce the value-added tax (VAT) from the current 19% to 7% for affordable rentals and to start giving companies state loans with an interest rate of 1%.

In the near future, the German government plans to hold a summit with industry representatives to discuss the situation and develop measures to support the real estate market.