PHOTO: Britannica
In the third quarter, Germany witnessed a historic 10.2% plunge in house prices, highlighting the ongoing challenges faced by Europe’s largest economy in the aftermath of the pandemic. This decline marked the fourth consecutive quarter of year-over-year decreases and stands as the most substantial drop recorded since the German statistics office commenced its data tracking in 2000.
This downturn occurs against the backdrop of a severe property crisis, considered the most significant in decades for Germany’s economy. Konstantin Kholodilin from the German Institute for Economic Research explained, “Until 2022, there was a speculative price bubble in Germany, one of the biggest in the last 50 years. Prices have been falling ever since. The bubble has burst.”
The property sector in Germany and across Europe had experienced a prolonged boom fueled by low-interest rates and robust demand. However, a notable surge in interest rates and associated costs has brought this growth to a halt, pushing developers into insolvency as bank financing dries up and transactions come to a standstill.
Compounding the economic challenges, official data reveals that Germany ranks as the worst-performing G7 economy since the onset of the pandemic, with a meager growth rate of just 0.3%. Meanwhile, the United Kingdom has slipped behind France to become the second-worst performer, as downward revisions to growth leave the UK teetering on the brink of recession.