Higher interest rates, inflation, economic crisis: According to a study, prices for German residential real estate fell more sharply in 2023 than they have in at least 60 years. Condominiums fell in price by 8.9 percent, single-family homes by 11.3 percent and apartment buildings by 20.1 percent, as the Kiel Institute for the World Economy (IfW) announced on Thursday. Adjusted for inflation – i.e. measured in current purchasing power – the reduction in value is even more significant: it is around five percentage points higher. “The speed and extent of the current decline in real estate prices in Germany is historically unique,” it said. “Never since the appraisal committees began collecting purchase prices in the 1960s Real estate prices So fast, so strong.” However, the most recent price drop was preceded by a historically unique price rally that began around 2009. Since then, prices have risen three to four times, depending on the segment, before the sudden fall began in 2022. The price drop is also bothering the large real estate groups in Germany, because it is causing billions in devaluations of the stocks on their balance sheets. “We expect further valuation losses,” Martin Thiel, CFO and co-head of the TAG Immobilien group, told the Reuters news agency. The Companies would have to prepare for a decline of up to 30 percent compared to the all-time highs in the summer of 2022. Industry leader Vonovia assumes that the market may have reached its lowest point. The IfW speaks of a price correction. “In view of the exorbitant price increase for over ten years years and a new interest rate environment, a phase of price correction is certainly appropriate and, even on the current scale, is not worrisome for the overall economy,” said IfW President Moritz Schularick. In the fourth quarter of 2023, the rate of price decline has slowed. Compared to the previous quarter, prices for condominiums only fell slightly by 0.6 percent and those for single-family homes fell by 1.2 percent. Multi-family houses even rose in price by 4.7 percent, but the fluctuations here are relatively high due to the low number of transactions. According to the information, the sales prices for condominiums in Germany’s top 7 metropolises (Berlin, Düsseldorf, Frankfurt, Hamburg, Cologne, Munich, Stuttgart) show a very heterogeneous development.