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Real estate market: Loss of almost a trillion euros in Germany
Billions in losses in the German real estate market: What this means for homeowners and how the situation is developing. Experts warn of rising interest rates and falling property values.
Real estate market: Loss of almost a trillion euros in Germany
The German real estate market is currently affected by significant losses, amounting to almost one trillion euros. Homeowners in particular feel these effects clearly. In 2023, real estate prices fell by 8.4 percent, which led to massive disruption in the industry. Numerous real estate companies have gone bankrupt and hundreds of bankruptcies have already been registered.
The official figures for German private investors' real estate assets of 10.2 trillion euros fell by 479 billion euros in the past 12 months to the end of September. According to reports from Barkow Consulting, the actual loss is even higher because the inflation rate was not taken into account. Taking into account an inflation rate of 4.5 percent, the real wealth loss amounts to 944 billion euros, almost double the amount mentioned first.
These massive losses cause interest rates to rise while properties lose value. Homeowners feel the effects, particularly when finalizing real estate financing. Although market fluctuations are normal and usually have little impact, significant price corrections in the residential property market may result in lenders correcting loan-to-value ratios.
The challenges in the real estate market are also noticeable among owners who want to sell their properties. It is common to have problems finding interested parties. The timing at which a property is offered for sale is crucial. Although 2024 begins with a slight recovery in the market, it remains unclear when property prices will recover and the market will stabilize again.