German cities and countryside see record drop in house prices
The cost of buying a house in Germany dropped significantly in the second quarter of 2023, figures from the Federal Statistical Office (Destatis) have revealed. However, the cause isn’t something to celebrate.
German house prices see record drop in 2023
The second quarter of 2023 saw a record drop in the cost of buying a house or flat in Germany. According to figures recently published by Destatis, on average property is now 9,9 percent cheaper than during the same period in 2022.
Destatis reported that the year-on-year drop is the biggest since modern records began in 2000. Since the cost of buying a house peaked in the second quarter of 2022, it has been falling steadily as experts predicted.
That said, the drop was smaller than those seen in the two previous quarters. The last quarter of 2022 and the first quarter of 2023 saw average house prices drop by 5,1 and 2,9 percent respectively.
Many in Germany cannot afford to take out a mortgage
Though more acute in cities, the drop can be seen in rural areas and across federal states. In all of Germany’s largest metropolitan areas, Berlin, Hamburg, Munich, Cologne, Frankfurt, Stuttgart and Dusseldorf, the cost of owner-occupied housing fell by 9,8 percent.
But this doesn’t mean the cheaper houses are set to be snapped up by people looking to live in them. According to Destatis the declining trend in the German housing market since prices peaked in 2022 is down to increased interest rates, which means fewer people can afford to take out a mortgage to buy a property.
The past two years have been shaped by rising inflation rates in Germany, and only in August 2023 did workers in the federal republic see their first real wage increase after two years of losses. For the majority of people, renting is becoming increasingly unaffordable and buying doesn’t seem like a viable alternative either.
A recent representative survey conducted by the BHW Bausparkasse, a German bank providing mortgage loans, has revealed that only 6 percent of the population intended to buy a house in Germany over 2023, a 50 percent decrease compared to 10 years ago.
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