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Experts Predict Sharp Decline In German Property Market

Image Source: I Wei Huang / Shutterstock

Germany has enjoyed a robust and stable real estate market for many years, boasting a consistent flow of high-end properties entering and exiting the market. However, experts now anticipate an end to this era of stability in the coming years.

Economic specialists foresee the possibility of a significant 20% to 25% drop in property prices in Germany as early as 2023. According to Jochen Moebert, a macroeconomic expert at Deutsche Bank, the decline is imminent due to the need for higher rental returns for investors, especially in the context of decreasing mortgage rates, which have plummeted by approximately 5% since March.

Moebert further stated, “The most substantial price reductions were observed in June and July on a month-to-month basis… However, from August to October, the rate of decline has slowed to less than 1%… This suggests some positivity from an investor’s viewpoint.”

These projected price declines are primarily attributed to global economic challenges such as a looming recession and escalating energy costs. In the words of Michael Voigtländer from The Cologne Institute for Economic Research, “In the absence of an energy crisis or recession, we would have expected further price increments. However, the current situation necessitates a significant adjustment to prevailing conditions.”

While a downturn appears inevitable, some analysts remain cautiously optimistic about the potential bottoming out of the market. Bundesbank Vice President Claudia Buch shared her perspective with CNBC, stating, “While we are witnessing a deceleration in residential property price growth, there hasn’t been a complete reversal in the overall trend. House prices are still on the rise, albeit at a slower pace. Nevertheless, there is no indication of a significant crash in property prices or a decline in overvaluations.”

Image Source: I Wei Huang / Shutterstock

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