Real estate price index Q4.23: Residential and commercial property prices in Germany in the fourth quarter of 2023 decreased by 6.1 %

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The price adjustments on the German real estate market continue in the fourth quarter of 2023, as the new real estate price index of the Association of German Pfandbriefbanken (VDP) shows. Compared to the previous quarter, property prices fell by an average of 7.2%. Compared to the highest level in the second quarter of 2022, there is a decline of 10.0%.

For residential properties, the decline in fourth quarter compared to the same period last year is 6.1%. Since the highest level in the second quarter of 2022, the prices for residential properties have dropped by a total of 8.4%. The decline in commercial properties between the final quartals in 2022 and 2023 is 12.1% and 4.9% compared to the previous quarter. Since the highest level in the second quarter of 2022, the prices for commercial properties have dropped by 16.5%.

The VDP general manager Jens Tolckmitt does not see a trend reversal in real estate prices and still expects a difficult situation on the real estate market for 2024. In the area of ​​residential properties in particular, there are clear climbs in rents and returns. This is mainly due to the ongoing lack of living space in metropolitan areas. Tolckmitt appeals to politics to implement the measures taken to create affordable living space.

In the top 7 cities (Berlin, Düsseldorf, Frankfurt am Main, Hamburg, Cologne, Munich and Stuttgart), residential property prices are somewhat more resilient than in the entire federal territory, but there are also price returns here. The prices have dropped significantly in Berlin and Munich.

The price declines on the commercial property market are even stronger than for residential properties. Office properties in particular are affected because demand is behavior due to the uncertainty about economic development and the effects of the home office trend. However, an increase in new contract rents in retail properties indicates an increased investor issue.

For 2024, Tolckmitt not predicts a stabilization of prices on the residential property market in summer and on the commercial property market before the end of the year. However, interest stabilization, rising returns and rent increases suggest that the attractiveness of real estate investments will increase again.


Source: Association of German Pfandbriefbanken (VDP) e.V./OTS