Property prices in Germany have been falling throughout 2023. Experts believe that this is the result of the bursting of a speculative bubble – one of the largest in the last half-century.
Poles observing rising real estate prices in our country are wondering whether what is happening can be called a market bubble, and if so, when it will burst. Supporters of the bank theory argue that prices cannot increase forever, because at this rate there will soon be no buyers (with the exception of foreign investment funds, although they are also guided by some logic in their purchases and cannot overpay). Opponents of this approach talk about rising prices of energy and construction materials, which limit the scope for any reductions.
Property prices in Germany have been falling throughout 2023
The examples of Sweden and Germany prove that prices may start to fall even after long-term increases. Our neighbors’ real estate prices were cheaper throughout 2023. In the third quarter of 2023, residential property prices recorded a decline of 10.2 percent. “Really, prices dropped by an average of 15% during the year. This is probably the biggest decline in Europe right now,” wrote Tomasz Narkun, a real estate expert, on X.
Konstantin Cholodilin from the German Institute for Economic Research (DIW) admitted in an interview with Reuters that a “speculative bubble” had burst on the German market. – Until 2022, there was a speculative price bubble in Germany, one of the largest in 50 years. Since then, prices have been falling, he said.
The drop in prices pleased buyers, but thwarted developers’ plans. The construction industry recorded a 6.3 percent decline in new orders in October.
“In the environment of increased interest rates, the construction industry is experiencing a strong slowdown combined with high production and debt servicing costs. The government has announced that it will soon present a strong stimulus package,” wrote Tomasz Narkun on X a few weeks ago.
Poles became interested in real estate in Germany
– The median price of apartments in Germany in the third quarter of 2023 was EUR 4,700, or just over PLN 23,000. Of course, the highest price per square meter of an apartment in Berlin is approximately EUR 8,500. However, there are regions such as the Rhineland or Lower Saxony, where prices are just over PLN 3,000. euro per square meter – said Mirosław Król, a real estate market expert, in an interview with RMF FM.
It turns out that falling housing prices encourage Poles living near the German border (as well as those commuting to work in Germany) to buy an apartment there. – Poles are asking about apartment prices in Germany for the first time in months. They are thinking about living close to the Polish-German border, but also about investments. The Polish market is no longer attractive for some investors, added Król.