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There is a threat of falling prices on the real estate market

A new neighborhood on the outskirts of Leipzig

The rapid and significant increase in construction costs and building interest is depressing the mood in the real estate sector.

(Photo: dpa)

Frankfurt The boom in the residential real estate market in Germany is in danger of coming to an end. This could even lead to price cuts, as real estate professionals fear, according to a recent survey conducted by the Cologne Institute for Economic Research (IW) in collaboration with the industry association ZIA and available exclusively to Handelsblatt.

“Property prices have only risen for 12 years and we kept speculating that things could go down,” commented IW expert Ralph Henger on the survey results. Now is the time indeed. “By all indications, a slight drop in prices is to be expected,” says Henger.

The reason for the bad mood is mainly the increase in financing costs for real estate. A turnaround in interest rates on financial markets was already set last summer and accelerated in recent weeks. More recently, construction interest on ten-year loans was nearly three percent – at the beginning of the year it was still around one percent.

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