In a new survey of the real estate market in Germany’s leading urban centers, the Kiel-based Institute of World Economy reports a fall in prices in the third quarter by 11.4% against the same quarter in 2022. The sector faces a dual crisis: potential purchasers of condominiums and family homes are hesitating to buy, because they hope prices will drop further, and owners that want to sell are presently getting almost a quarter less for an apartment building than a year ago (−24%).
The number of properties sold has therefore fallen significantly. Compared with the previous year (Q3, 2022), there were around a third fewer sales in all market segments. Compared to the average for 2019, 2020, and 2021, the slump is as much as 50%.
As reported earlier in the media, the real estate crisis is radiating into the construction sector as a whole, as project developers hesitate to launch new projects out of concern that they will not yield enough revenue to surpass their investment. The delays in permits for new projects, caused by overambitious anti-emissions regulations insisted by the German bureaucracy, add to the problems. This is highlighted by the fact that, of the 400,000 new flats promised by the German government for 2023 to ease the chronic undersupply in densely-populated urban centers, only 250,000 to 280,000 will be built by the end of the year.
