Germany’s housing boom is over as prices for residential properties dropped for the first time in over a decade.
(Bloomberg) — Germany’s housing boom is over as prices for residential properties dropped for the first time in over a decade.
A measure of home valuations fell in December by 0.8% from the same month a year ago, according to data released by the mortgage technology provider Europace AG on Thursday. That’s the first decline in the company’s EPX index for the month since 2009.
The drop in housing prices highlights how much the situation in the German real estate market has changed since the European Central Bank started last year to reverse a decade of low and even negative interest rates. The move has doubled or even tripled the cost of mortgages, pricing many consumers out of the once red-hot market for homes.
The amount of new loans for house purchases in Germany dropped 30% in the four months following the decision last July to raise interest rates for the first time since 2011, according to ECB data. The central bank has since increased rates three more times, lifting its deposit facility rate to currently 2.0% from -0.5% before the summer.
The change in fortunes is also reflected in the German Real Estate Finance Index, which fell in December to its lowest level since the measure of property sentiment was started in 2011.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.