demand decreases
Real estate price jumps are getting smaller
12/22/2022 09:57 am
Real estate prices have been steadily increasing in recent years. While the trend continues in the third quarter year-on-year, it is slowing sharply. Reason: Because of inflation concerns and rising interest rates and building prices, the Germans are exercising restraint.
The subdued demand for real estate is reflected in the prices for apartments and houses in Germany. The price increase weakened significantly in the third quarter within a year. Compared to the previous quarter, residential real estate was even 0.4 percent cheaper, as reported by the Federal Statistical Office.
Residential real estate cost an average of 4.9 percent more in the period from July to September than in the same quarter of the previous year. According to the information, a lower increase was last recorded in the third quarter of 2015 at 4.4 percent. In the second quarter of the current year, detached and semi-detached houses and condominiums had become more expensive by 9.7 percent within a year, according to the latest data.
The largest price increases in the third quarter were in sparsely populated rural districts. Single and two-family houses there increased in price by 7.8 percent, condominiums cost 7.4 percent more than a year earlier. In the top cities of Berlin, Hamburg, Munich, Cologne, Frankfurt, Stuttgart and Düsseldorf, prices for single and two-family houses rose by 6.2 percent and for condominiums by 5.0 percent.
The weakest increase was 1.8 percent for single and two-family houses in urban districts. Apartments there cost 4.5 percent more than in the same quarter of the previous year. The rise in interest rates on loans, but also the significant rise in inflation and high building prices are having a negative impact on the demand for real estate after years of boom. The German Institute for Economic Research (DIW) considers a fall in residential real estate prices of up to ten percent possible in the coming year. DZ Bank expects a minus of up to six percent in 2023.