German house prices suffered their biggest six-month fall in more than 20 years in the second half of 2022, underlining how an unprecedented rise in interest rates has brought an abrupt end to the decade-long boom in Europe’s largest property market.
The Association of German Pfandbrief Banks (VDP), which collects data from 700 credit institutions, said residential property prices had fallen 1.8 per cent in the fourth quarter, compared with the previous quarter. The cumulative 2.5 per cent fall recorded over the final six months of 2022 was the biggest since VDP started collecting the data in 2003.
Higher borrowing costs are deterring many Europeans from buying a house, leading to a sharp drop in demand for mortgages, which is driving down prices and pushing up rental costs. Commercial property prices are falling even faster in Germany and much of Europe, while construction of new houses, offices and shops is also in sharp decline.
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The Association of German Pfandbrief Banks (VDP), which collects data from 700 credit institutions, said residential property prices had fallen 1.8 per cent in the fourth quarter, compared with the previous quarter. The cumulative 2.5 per cent fall recorded over the final six months of 2022 was the biggest since VDP started collecting the data in 2003.
Higher borrowing costs are deterring many Europeans from buying a house, leading to a sharp drop in demand for mortgages, which is driving down prices and pushing up rental costs. Commercial property prices are falling even faster in Germany and much of Europe, while construction of new houses, offices and shops is also in sharp decline.
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