WIESBADEN (dpa-AFX) - Prices for houses and apartments fell more sharply last year than at any time since the turn of the millennium. According to the Federal Statistical Office on Friday, residential real estate prices in Germany fell by an average of 8.4 percent compared to the previous year. "This was the sharpest year-on-year decline since the time series began in 2000 and the first decline since 2007."

The decline continued towards the end of the year: In the fourth quarter of 2023, prices fell by 7.1 percent year-on-year and by 2.0 percent compared to the previous quarter, according to the Wiesbaden-based statisticians. Year-on-year, existing properties fell in price by 7.8%, significantly more than new builds (minus 3.2%).

According to the statisticians, prices crumbled in both urban and rural areas. In urban districts, the fall in prices for detached and semi-detached houses in the fourth quarter was particularly high at eleven percent compared to the same quarter last year. In the seven metropolitan areas - Berlin, Hamburg, Munich, Koln, Frankfurt, Stuttgart and Düsseldorf - prices for detached and semi-detached houses fell by an average of 9.1 percent year-on-year at the end of the year, while condominiums cost 5.8 percent less.

The real estate market has been on a downward trend since mid-2022, the peak of the boom that lasted for years. According to the Kiel Institute for the World Economy (IfW), 2023 saw the sharpest fall in residential real estate prices in Germany for around 60 years.

The main reason for this is the sharp rise in interest rates, which have made loans much more expensive. Many people can no longer afford their own four walls and investments are no longer profitable for large investors. At the same time, demand for housing remains high, especially in cities, while new construction is in crisis due to the rise in interest rates and expensive materials./als/DP/zb