In the third quarter, Germany witnessed a record decline of 10.2% in house prices, marking a significant downturn in Europe’s largest economy post-pandemic.
This period marked the fourth successive quarter of year-on-year declines, representing the most substantial drop since the German statistical office started recording data in 2000.
This decrease is part of the most severe property crisis Europe’s largest economy has faced in decades.
Konstantin Kholodilin from the German Institute for Economic Research commented, “There was a speculative price bubble in Germany’s property market until 2022, one of the largest in the past 50 years. Since then, prices have been consistently falling. The bubble has now burst.”
For an extended period, the real estate market in Germany and other parts of Europe flourished, fueled by low-interest rates and high demand.
However, the recent steep increase in interest rates and costs has halted this growth, leading to financial difficulties for developers as bank funding becomes scarce and transactions stall.
This downturn coincides with data indicating that Germany has been the weakest performer among the G7 economies since the pandemic, with only a 0.3% growth.
Meanwhile, the United Kingdom, after recent adjustments to its growth figures, has fallen behind France, becoming the second weakest performer and teetering on the edge of a recession.
