German residential property prices keep falling in Q1

BERLIN (Reuters) -German residential property prices continued to fall in the first quarter of this year, dropping by an average of 5.7% year-on-year, even after the biggest slump on record in 2023, federal statistics office data showed on Friday.

High financing and construction costs continue to weigh on Europe's biggest economy, triggering the most severe property crisis in the country in decades.

Last year, home prices fell by 8.4%, the sharpest drop since the beginning of the statistical records in 2000.

According to a poll of 13 real estate analysts conducted by Reuters, prices will continue to fall in 2024 as a whole, with a decrease of 2% likely, bouncing back to 2% growth only in 2025.

Landesbank Baden-Wuerttemberg (LBBW) economist Martin Gueth said he expects the decline in prices to now come to a halt, noting rising demand in home ownership while the housing shortage is still high.

"In particular, households that want to use the property themselves are now increasingly coming back to the market as prospective buyers," said Gueth.

The expected easing in monetary policy by top central banks around the world this year should also help, he added.

(Reporting by Rene Wagner, writing by Andrey Sychev, additional reporting by Tom Sims, editing by Miranda Murray)