The crisis in the German real estate market continues
German commercial real estate prices decreased by 0.8 percent in the first quarter of this year compared to the previous quarter and by 9.6 percent on an annual basis. According to the data announced by experts, the crisis in the German real estate market continues.
The German Mortgage Banks Association (VDP), which provides mortgage financing in Germany, announced house price data for the first quarter of the year.
Accordingly, the crisis in the German real estate market continues.
While housing prices decreased by an average of 0.2 percent in the first quarter of the year compared to the previous quarter, a decrease of 4.3 percent was noted when compared to the same period in 2023.
German commercial real estate prices decreased by 0.8 percent in the first quarter of this year compared to the previous quarter and by 9.6 percent on an annual basis.
Commercial real estate prices decreased by 12.1 percent in the last quarter of 2023 compared to the same period of the previous year, recording the sharpest decline since records have been kept.
The decline in commercial properties is greater than residential
In his assessment of the issue, VDP Chief Executive Officer Jens Tolckmitt said, “The development in prices confirms our prediction that the declines will continue. There is a heavier decline for commercial properties compared to residential properties. The situation will continue to be difficult in 2024.”
The real estate sector has gained momentum in Germany for many years as interest rates decreased and demand increased. However, the European Central Bank’s (ECB) struggle with increasing interest rates against high inflation negatively affects the real estate sector. High interest rates also cause problems in the economy by making investments in construction and other sectors more expensive.
Material costs have also increased significantly, making many projects unprofitable for builders. Difficult financial conditions and cancellation or suspension of construction agreements also led some construction companies to bankruptcy.