Sharp drop in residential property prices in Germany

(Patria) - Residential property prices in Germany fell sharply in the second quarter, data from the statistical office showed today, reflecting the impact of high interest rates on demand.

Property prices plummeted in the period from April to June by 9.9 percent compared to the same period last year, the strongest since Destatis began collecting data in 2000.

On a quarterly basis, they decreased by 1.5 percent.

In cities like Berlin, Hamburg, and Munich, apartments were 9.8 percent cheaper than in the second quarter of last year, and family houses were 12.6 percent cheaper.

In sparsely populated, rural areas, a milder price drop was recorded, with apartments becoming 7.0 percent cheaper and family houses 8.1 percent cheaper.

Residential property prices in Germany have been falling since the end of last year, Destatis data shows, revealing an increasingly deep decline, by 3.6 percent in the fourth quarter of last year and by 6.8 percent in the first three months of this year.

The price drop reflects weakening demand under the pressure of high interest rates, which prompted Germany's leading property development group Vonovia to postpone plans for building 60,000 apartments.

The company also points to high construction costs, which, according to a spokesperson, have risen from around three to around five thousand euros per square meter, reports Hina.