Downward trend ends – houses are becoming more expensive again

Prices on the German housing market have been falling since mid-2022. Now the downward trend seems to have stopped. Houses are becoming more expensive again.

Prices for houses and apartments in Germany are stabilizing again after significant declines. Residential properties fell by 2.6 percent in the second quarter compared to the same period last year, according to the Federal Statistical Office in Wiesbaden. Prices rose by 1.3 percent compared to the previous quarter. “This is the first increase compared to a previous quarter since the second quarter of 2022,” the authority wrote.

Compared to the first quarter of the current year, only apartments in sparsely populated rural regions saw price declines. On the other hand, single- and two-family houses became more expensive on average in all types of regions compared to the previous quarter, the statisticians explained.

In the seven metropolises of Berlin, Hamburg, Munich, Cologne, Frankfurt, Stuttgart and Düsseldorf, prices rose by 1.6 percent (apartments) and 2.3 percent (single and two-family houses) compared to the previous quarter. Compared to the same quarter last year, apartments were 1.5 percent cheaper and houses four percent.

Residential properties have become significantly cheaper since mid-2022, the peak of the years-long boom. According to the Federal Statistical Office, apartments and houses became cheaper by an average of 8.5 percent in 2023 compared to the previous year. The Kiel Institute for the World Economy (IfW) spoke of the sharpest price drop in around 60 years. In the first quarter, prices had fallen by 5.7 percent compared to the same quarter last year.

The main reason for the end of the real estate boom was rising interest rates on loans. Many people can no longer afford their own home, and sellers have to lower their prices. Recently, however, real estate has become somewhat more accessible again, as not only purchase prices but also construction interest rates have fallen.