Germany's real estate market started recovering in the second quarter of 2023 after a downward trend. This is a main conclusion from the latest update of the GREIX-Index (German Real Estate Index) a project of the Cluster of Excellence ECONtribute: Markets & Public Policy and the Kiel Institute for the World Economy. The real estate price index for Germany tracks the development of German real estate prices using the latest scientific methodology.
The Greix is based on actual, notarized sales prices. It tracks the price development of individual cities and neighbourhoods back to 1960 and is based on more than two million transaction data. The dataset can be used to analyze long-term trends in real estate markets and to contextualize current developments in a historical context. All data for currently 18 German cities and their districts are freely available on the Greix website.
In most Top-7 German cities (Berlin, Düsseldorf, Frankfurt a.M., Hamburg, Cologne, Munich, and Stuttgart), apartment prices are stabilizing or even rising. Only Hamburg and Frankfurt showed small drops. Compared with their respective highs, sales prices for apartments are all down, both for all cities in the Top-7 cities and for the Greix itself, i.e. the entirety of the 18 cities examined.
In smaller cities, the picture is mixed, with apartments becoming even more affordable or already more expensive again, depending on the region. For example, Erfurt saw a big increase of 5.9% in the last quarter, while Wiesbaden went down by 3.7%. The Greix index, across all cities shows a price decline of around 9.0% compared to the peak values. This indicates that the price decline outside the Top-7 city areas was less than within them, as the Greix price decline is below the average for the Top-7 cities.
Moritz Schularick, President of the Kiel Institute, said, "The German real estate market proved to be quite robust in the second quarter. The expectation that the European Central Bank’s interest rate hikes will gradually come to an end has obviously done good to the real estate market after the significant price corrections of recent months." He also said that the fact that real estate prices are becoming more stable even after accounting for inflation is a promising sign for the economy.
ECONtribute is the only Cluster of Excellence in economics that is funded by the German Research Foundation and a joint initiative of the universities of Bonn and Cologne. The Cluster’s research focuses on markets at the interface between business, politics and society. The Cluster aims to advance a new paradigm for the analysis of market failure in light of fundamental societal, technological and economic challenges, such as increasing inequality and political polarization or global financial crises.