Germany’s residential property slump may be over if Q2 results are any guide. The turnaround appears to be based on confidence that interest rates are finally beginning to come down. Nationwide, existing flats dropped 16% in price, while new build units only lost 6%. But some town suffered enormous losses. In Stuttgart, house prices fell by more than 20% compared to their peak, a figure that translates to a 30% price adjusted loss in value. The figures were released as part of the ongoing German Real Estate Index that’s maintained by the Kiel Institute which tracks notarized sales prices.
“The turnaround in the real estate market has begun,” says Jonas Zdrzalek, a real estate expert at Kiel Institute for the World Economy. “The great uncertainty of the past few years and months is clearly subsiding and the prospect of falling interest rates is stabilizing the market. Investors appear to have regained confidence in the long-term appreciation of real estate.” He added that the slump in new construction is tightening supply.
Q2 prices for apartments rose by 2.4 percent compared to Q1 2024, while single-family houses increased by 2.0 percent. When it comes to multi-family houses, prices rose by 4.4 percent, having fallen an amazing 10.5% in Q1. Zdrzalek says however that low transaction numbers makes this segment too volatile to put great faith in. He said that prices overall are increasing, even when adjusted for inflation. What hasn’t recovered yet are transaction numbers, just 60% of the 2019 to 2021 average. It’s even worse for new buildings – just 35%.
The number of real estate transactions was increasing slightly but was still at a low level and only around 60 percent of the average from 2019 to 2021. For new buildings, the level was only around 35 percent.
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