BERLIN, June 21 (Xinhua) -- German residential property prices plunged 5.7 percent year-on-year in the first quarter (Q1) of 2024, according to preliminary figures published by the Federal Statistical Office (Destatis) on Friday.
Single and two-family houses recorded the sharpest declines, with prices in Germany's seven largest cities -- Berlin, Hamburg, Munich, Cologne, Frankfurt am Main, Stuttgart and Dusseldorf -- down 9.5 percent. In smaller cities and rural areas, similar homes still saw declines of around 7 percent.
"Only more supply on the housing market through new construction will lead to a significant fall in prices," Andreas Beulich, managing director of the Federal Association of Independent Real Estate and Housing Companies (BFW) told Xinhua. This could only be achieved through "consistent deregulation."
After rising continuously for more than 10 years, residential real estate prices in Germany have now fallen for six consecutive quarters. However, this has not led to an increase in homeownership due to high interest rates and a weak economy.
Although the value of residential real estate loans went up 7.2 percent in the first three months to 17.8 billion euros (19 billion U.S. dollars), "new business was far from the level seen during the zero-interest rate phase," the Association of German Pfandbrief Banks (vdp) said in March.
Currently, the 10-year fixed building loan rate is around 3.7 percent, according to Interhyp, a Munich-based broker for residential mortgages.
"In anticipation of interest rate cuts by the ECB, construction interest rates have already reacted and fell noticeably at the end of 2023," said Interhyp expert Mirjam Mohr.
Germany has a comparatively low homeownership rate, which was only 49 percent in 2021. In contrast, up to 70 percent of the people in the European Union (EU) owned their own home, according to EU's statistical office Eurostat. (1 euro = 1.07 U.S. dollar)
