Main article: German economy
2023
Record housing price crash in 60 years
Residential property prices in Germany in 2023 showed the steepest drop in 60 years.
Apartment buildings led the decline by 20%. Apartments fell by 9%, and single-family houses - by 11%.
House prices in Germany fell 9.9% year-over-year in Q2 2023 - the steepest drop since the countdown began in 2000.
20-year record drop in office real estate market
The office property market in Germany is experiencing its steepest drop in 20 years as rising funding costs and sluggish trends of a return to office properties dampen investor appetite.
The collapse of the number of transactions and the first bankruptcies of construction companies
Germany's real estate crisis is making its first major sacrifices. Real estate investors pay attention to landlords and owners who do not cope with their duties, but it is the developers who are most at risk of bankruptcy.
"Developers are struggling with rising construction costs, rising interest rates and falling prices," said Marlis Raschke, head of restructuring and bankruptcy at law firm Noerr, in October 2023. "Several companies have filed for bankruptcy in recent weeks and we expect to see more."
Germany's construction sector is going through a real meltdown. The construction sector's PMI fell to 39.3 in September from 41.5 in August, the lowest since statistics began.
The volume of new construction in Germany collapsed by 47% in the first half of the year
"Why is Germany's property sector in landfill?" - [1] Reuters wondered in August 2023. Germany has long enjoyed the fruits of an era of cheap money that fueled a decade-long boom in real estate, but the sector is now undergoing a major turnaround.
the German Vonovia The latest signs of stress in the sector - the largest property group announced multibillion-dollar losses and write-offs, and job growth for builders stalled.
Weakness in real estate USA has also manifested itself in and, Sweden but Germany matters a lot as it is the largest economy Europe and largest market for real estate investment on the continent. According to the German Real Estate Federation, the real estate sector accounts for about a fifth of economic output and one in ten jobs.
In the first half of 2023, new construction in Germany fell sharply by 47% compared to the average for the past two years, and the number of building permits issued in the first five months decreased by 27%.
The main factor has been a rapid rise in interest rates by the European Central Bank, which is holding back the highest inflation rate in decades, but that's not all.
In addition, the cost of construction has sharply increased, and the demand for office and retail space after the COVID-19 pandemic has decreased. The conflict in Ukraine also made German real estate more risky for foreign investors.
"If you are an investor from the Middle East, then Germany seems to you quite close to Ukraine. They say: "I want to send money to the US and Asia, not Germany," says Florian Schwalm, a consultant at EY.
Germany, whose population has recently been growing at the expense of millions of refugees from Ukraine, intends to build 400 thousand apartments a year, but copes with the tasks set.
Collapse in the volume of transactions with commercial real estate
In the second quarter of 2023, the volume of commercial real estate transactions in Europe fell by 58% to the lowest level since 2010.
The office segment suffered the most - the fall was 68%, while in the hotel segment the fall was 36%. In all major markets, there was a significant decrease in the volume of transactions.
Record decline in housing prices in the first quarter on 6.8%
House prices in the first quarter were also down 6.8% on the previous year, the biggest since Germany's statistics office began keeping records.
Sharp reduction in permits for new homes due to high rates
Germany's housing crisis is deepening. Housing approvals fell by an astonishing 20.6 per cent in February 2023.
It was the 10th straight decline due to rising interest rates and construction costs.
2022: German residential property prices fall for first time since 2009
The cost of housing in December 2022 decreased by 0.8% compared to December 2021, this is data from Eurospace, which collects data on credit products.
The European Central Bank in July 2022 moved away from years of low and even negative interest rate policies. This doubled the cost of mortgages: in four months after the ECB's decision to raise the rate, the number of loans for the purchase of housing decreased by 30%.
Later data showed a sharp decline in prices in the 4th quarter of 2022.
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