The decline was 3.3 percent compared to the first quarter of 2022 and 2.3 percent compared to the direct previous quarter, as shown by the real estate price index of the Association of German Pfandbrief Banks (VDP).
In both annual and quarterly terms, these are the sharpest declines since index records began in 2003.
"The entire real estate market has been in a state of upheaval since mid-2022. This is particularly evident in real estate prices," said Jens Tolckmitt, VDP Managing Director, on Wednesday. "The many negative factors such as inflation, rising interest rates and uncertainty are leading to a price correction in all property classes."
However, residential property prices fell more moderately by 2.1 percent year-on-year. Here, the continued low level of construction activity and the high demand for housing had a stabilizing effect.
Experts: Real estate prices continue to fall
Prices for commercial real estate declined much more sharply, falling by 8.3 percent. At minus 10.5 percent, retail real estate prices lost more than office property prices at minus 7.5 percent.
"We expect prices to continue to fall in the coming quarters, with varying degrees in the individual property classes," said Tolckmitt. "However, we still see no signs of an abrupt drop in prices."
The VDP currently has almost 50 members, including BayernLB, Helaba, Aareal Bank AG, Deutsche Bank AG and Commerzbank AG.