November 20, 2023

Housing bubble index Q3/2023: Fewer and fewer regions at risk

The empirica housing bubble index indicates that the risk of a housing market bubble in Germany is decreasing. In recent quarters, there has been a change: there are fewer and fewer vulnerable districts. The danger is still there, but its extent is getting smaller. The number of endangered regions has been falling for three quarters in a row.

All sub-indices, i.e., completions, multipliers, housing loans, and price-income, show a slight decline. The overall index is falling most sharply in swarm cities. Overall, the empirica bubble index now indicates a moderate to high bubble risk for 341 districts.

The rebound potential, which describes the relative price gap between purchase prices for condominiums and rents, has been falling nationwide since Q1 2022 and is now at 24%. The price increase in the top 7 cities now only has a lead of 34% over the rent increase. This trend is favored by high rent increases, which are caused by too little new construction with rising construction and financing costs.

Development of the rebound potential and the interest rate in the period Q1 2005 to Q3 2023

The empirica bubble index is a quarterly published index that assesses the risk of a housing market bubble in various regions of Germany. The index shows the regional spread of a bubble danger. An detailed analysis of the current empirica Bubble Index  (in German) has now been published by empirica for Q3 2023.

housing market property rents housing market bubble regional data 2023
Housing market data Q3/2023: How long do prices typically fall?

Housing market data Q3/2023: How long do prices typically fall?

The empirica housing price index continues to show a trend of declining purchase prices for condominiums and single- or two-family houses, while the indices for rental apartments continue to rise. For newly built condominiums, the indices stabilize with an increase of 0.2% compared to the previous quarter. In contrast, the indices for newly built detached and semi-detached houses continue to decline (-0.9%). The increase in newly built rental apartments amounts to 1.2% this quarter.
Housing market data Q2/2023: The decline in purchase prices continues

Housing market data Q2/2023: The decline in purchase prices continues

The last few quarters have shown a noteworthy development on the real estate market. The indices for owner-occupied flats and detached or semi-detached houses have already fallen for the fourth quarter in a row, while rented flats recorded an increase of 1.1% compared to the previous quarter.
Housing bubble index Q2/2024: Distribution stagnates, but urgency continues to fall

Housing bubble index Q2/2024: Distribution stagnates, but urgency continues to fall

The current sharp rise in rents contrasts with the moderate increase in purchase prices. This is positive for the risk of a bubble, as the high valuation level of property is increasingly justified. At the same time, the slight fall in interest rates is leading to an increase in new lending for residential construction, which in turn harbours the potential for further price rises and thus increases the risk of a bubble.