An economic indicator for The West?
German property prices plummet as housing bubble bursts
Chris Price
Fri, December 22, 2023 at 1:40 PM CST
Chancellor Olaf Scholz is contending with a German economy that is the worst performer in the G7 and the bursting of a house price bubble - REUTERS/Liesa Johannssen
House prices in Germany dropped by a record 10.2pc in the third quarter in a further sign of the struggles faced by Europe’s largest economy since the pandemic.
It was the fourth consecutive quarter of declines compared to the same time a year earlier, and the biggest since Germany’s statistics office began keeping records in the year 2000.
The drop comes amid the biggest property crisis in decades in Europe’s largest economy.
Konstantin Kholodilin of the German Institute for Economic Research said: “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.”
For years, the property sector in Germany and elsewhere in Europe boomed as interest rates were low and demand strong.
But a sharp rise in rates and costs has put an end to the run, tipping developers into insolvency as bank financing dries up and deals freeze.
It comes as official data showed Germany is the worst performing G7 economy since the pandemic, growing by just 0.3pc.
Britain slipped back behind France to be the next worst performer after downward revisions to growth left the UK on the brink of recession.