Property values have seen steepest decline in more than two decades
German house prices declined by 9.9% during the April-to-June period of this year compared to the same period in 2022, marking the steepest drop since records began in 2000, official data showed on Friday.
According to the Federal Statistical Office (Destatis), property prices in Germany hit a record high in the second quarter of 2022.
“Since then, residential property prices have been declining quarter on quarter,” the office said.
The agency highlighted that the decrease was especially pronounced in Germany’s biggest cities.
Compared with the previous three months, prices reportedly declined by 1.5%, less than in the two preceding quarters. In the period January to March 2023, property prices saw a quarter-on-quarter decrease of 2.9%. In the final quarter of 2022, the decline totalled 5.1%.
The country’s construction sector has been severely hit by an unprecedented monetary-tightening campaign launched by the European Central Bank in response to raging inflation, and by uncertainty over new energy regulations.
Earlier this month, Germany-based real estate multinational Vonovia warned that the country’s construction sector, crucial for the EU’s biggest economy, was on the brink of collapse, putting the overall economy in jeopardy.
The sector, which had enjoyed a prolonged boom in the era of ultra-low borrowing costs, makes up 12% of Germany’s GDP and employs a million workers.
In April, Destatis issued gloomy projections for the construction sector, saying that the number of construction permits had been steadily declining since May 2022 and has been dropping by 10% each month from October 2022.
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