Prices for residential real estate fell at the end of 2022 for the first time in twelve years. They fell from October to December by an average of 3.6 percent compared to the same period last year, as the Federal Statistical Office announced on Friday. This is the first decline since the end of 2010, when there was a minus of 0.5 percent.
Purchase prices for apartments and detached and semi-detached houses fell even more sharply in the first quarter of 2007 by 3.8 percent. Measured in the third quarter of 2022, prices fell by an average of 5 percent. "The decline in purchase prices is likely to be due to lower demand as a result of increased financing costs and persistently high inflation," the statisticians explained.
In 2022 as a whole, however, prices for residential real estate continued to rise, as there were still increases in the first three quarters: On an annual average, they rose by 5.3 percent. In 2021, with an increase of 11.5 percent, there had been the strongest increase since the beginning of the time series in 2000.
Differences between urban and rural areas
Both in the cities and in the rural regions, there were mostly declines at the end of the year. "The prices for detached and semi-detached houses fell more sharply than those for condominiums," according to the statisticians.
For example, one- and two-family houses in the independent cities fell by 5.9 percent compared to the same quarter of the previous year. In contrast, prices for condominiums in these cities fell by only 1 percent.
In the sparsely populated rural districts, one- and two-family houses were 5.5 percent cheaper, while condominiums were slightly more expensive with an increase of 0.1 percent. In the metropolises of Berlin, Hamburg, Munich, Cologne, Frankfurt am Main, Stuttgart and Düsseldorf, prices for detached and semi-detached houses fell by 2.9 percent, while apartments had to be paid 1.6 percent less.
According to the Bundesbank, overvaluations in residential property prices continued last year. In the cities, residential property prices in 2022 were still between 25 and 40 percent above the justified level, as their economists found.