Houses and flats in Germany last year posted their largest price slump since at least the start of the millennium shedding an average of 8.4% in value compared with 2022.
"This was the sharpest year-on-year decline since the time series began in 2000 and the first decline since 2007," the Federal Statistical Office in Wiesbaden said on Friday.
Prior to this, residential property prices had climbed steadily between 2008 and 2022. Banks expect the latest decline to end this year as interest rates fall again.
In urban districts, the fall in prices for detached and semi-detached houses was as high at 11% in the fourth quarter of 2023, compared with the same quarter of the previous year. Buyers of condominiums paid an average of 7% less.
However, the figures are average data, and the price gap between modern, energy-efficient buildings and properties with high energy consumption is large.
While buildings with old oil or gas heating systems and poor energy classes lost a lot of value, according to studies, modern properties that consume little energy are selling for significantly more.
Meanwhile, demand for housing remains high in Germany, especially in the seven major cities of Berlin, Hamburg, Munich, Cologne, Frankfurt, Stuttgart and Dusseldorf.
This is partly driven by the high level of immigration, while new construction is in crisis due to the rise in interest rates and expensive materials.
The government's former target of 400,000 new homes per year has long been out of reach. The Kiel Institute for the World Economy (IfW) expects only around 225,000 completions in 2024 after around 270,000 last year.