Data published by the VDP banking association showed that in the last quarter of 2023, commercial real estate prices showed the largest drop in the entire history of observations, falling by 12.1% per annum and by 16.5% compared with the peak in the second quarter of 2022. Overall, the data confirmed the plight of the real estate sector, which is experiencing the worst crisis in recent decades.
VDP also reported that prices for all real estate decreased by an average of 7.2% compared to the last quarter of 2022 and by 2.2% compared to the 3rd quarter. The real estate price index amounted to 175.2 points (base year 2010 = 100 points), which is 10.0% below its high of the second quarter of 2022 (194.8 points). The index has been compiled every quarter since 2010 and, unlike other real estate market indices, is based on an assessment of actual data on real estate transactions from more than 700 credit institutions, providing price coverage of the entire German market for residential and commercial property quarter by quarter.
Residential real estate prices fell in the 4th quarter by 6.1% per annum and by 1.6% in quarterly terms. Compared to the peak of the second quarter of 2022, prices fell by 8.4%.
“2023 was a difficult year for the property sector, as we can see from price developments. There was no sign of recovery in the fourth quarter either. A trend reversal is not yet in sight for property prices, despite frequent public speculation. The property market remains in a downturn as we start 2024, and prices continue to drop. It will be some time before property buyers and sellers reach a new price balance, and only then will we see a noticeable recovery in the market. Prices can be expected to stabilize in the residential property market by the summer, but not before the end of the year in the commercial segment,” said VDP Chief Executive Jens Tolckmitt.