German house prices fell 9.9% from April to June this year compared to the same period in 2022, the biggest drop since records began in 2000, according to government data released on Friday.
Property prices in Germany will reach an all-time high in the second quarter of 2022, according to the Federal Statistical Office (Destatis).
“Since then, residential property prices have been declining quarter on quarter,” according to the office.
The drop was notably noticeable in Germany’s major cities, according to the agency.
Prices reportedly fell 1.5% over the previous three months, less than the prior two quarters. Between January and March 2023, house prices fell 2.9% quarter over quarter. The drop was 5.1% in the fourth quarter of 2022.
The country’s construction sector has been severely harmed by the European Central Bank’s unprecedented monetary tightening drive in response to roaring inflation, as well as uncertainties over new energy laws.
Earlier this month, the German-based real estate conglomerate Vonovia warned that the country’s construction sector, which is critical to the EU’s largest economy, was on the verge of collapsing, putting the entire economy in peril.
The sector, which saw a protracted boom during the period of ultra-low borrowing costs, accounts for 12% of Germany’s GDP and employs a million people.
Destatis presented bleak estimates for the construction sector in April, claiming that the number of construction licences has been continuously reducing since May 2022 and will decline by 10% each month beginning in October 2022.
