Germany’s Real Estate Sector Falls


Germany is a diverse country, and its real estate is no different as it has bloomed to stardom over the years. Regardless of your taste or budget, there is just something for everyone in Germany; from trendy lofts in Hamburg, to family homes in Köln, to apartments in Frankfurt and lots more.

However, the ailing state of the real estate and property sector in Germany brings to mind the popular saying that “Nothing good lasts forever;” one can’t help but wonder why the once booming sector is now going down.

The property sector in Germany generates roughly a fifth of economic output and also provides one in ten jobs; little wonder it is nicknamed the ‘engine room of Europe.’ Germany has over the years enjoyed the rewards of cheap money which later became a catalyst for a decade-long real estate boom.

But the real estate sector is now experiencing a major downfall of fortunes even as Germany’s largest real estate group, Vonovia, is said to have recorded multibillion-dollar losses and asset write-downs.

There is also a decline in job growth for construction workers as new constructions in the country fell to 47% in the first half of the year compared to the average for the past two years; thereby putting a hold on construction jobs and the number of building permits as well fell to 27% in the first five months.

Topping it off is the fall in prices of houses. The price of houses in Germany went down by 6.8% in the first quarter, and this is said to be the largest fall since Germany began keeping statistics.

A fall in the real estate and property sector in the United States and Sweden has also been recorded, but that of Germany is more important as it is the largest economy in Europe and the biggest real estate investment market on the continent.

Considering the increase in population as a result of migrants and refugees from Ukraine, Germany started off the year with a goal to build 400,000 apartments but is currently struggling to meet this target.

As one wonders what will be the fate of the ‘engine room of Europe’, Chancellor Olaf Scholz is scheduled to meet with politicians, ministries and representatives of the real estate industry on September 25th to find solutions.









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