German Pfandbrief banks granted more property loans from January to September than in the same period last year. According to the Association of German Pfandbrief Banks (VDP), the increase in total new lending was driven by residential property financing. In contrast, the granting of loans for commercial property continued to decline.

For VDP Chief Executive Jens Tolckmitt, this development is „a further clear sign that the residential property market is stabilising“. Nevertheless, the market continues to be characterised by excess demand. „Although the trend in commercial property financing remains considerably more restrained, the decline has slowed down appreciably during the course of this year,“ Tolckmitt added.

New business in property financing increased by 6.9% to 89.6 billion euros in the first three quarters of this year. New business of 31.2 billion euros in the third quarter was around the same level of 31.4 billion euros for the second quarter. Comparing the third quarter with the same period in 2023, new lending rose slightly by to 0.6%.

There was however significant growth in new business for residential property. From January to September, VDP member institutions granted 16% more loans (56.7 billion euros) than in the same period of the previous year. There was practically no change from the second to the third quarter of 2024.

According to the VDP, single-family and two-family houses were the main type of property financed in the first three quarters (+22.5% to 28.3 billion euros). The increase in condominiums was even higher (+39.1%) at 12.8 billion euros. In contrast, there was a significant drop in multi-family houses (-8.8% to 12.4 billion euros).

This development contrasts clearly with the commercial business. In the first three quarters, new business here fell by 5.7% year-on-year to 32.9 billion euros. A quarterly comparison with the second quarter shows a stabilisation. However, compared to the same quarter of the previous year, there was a significant drop of 14.5% to 32.9 billion euros.

This was primarily due to office property, at least in terms of volume. Here, loans totalling 16.8 billion euros were extended from January to September – 4% less than in the previous year. They therefore accounted for around half of all commercial property financing.

Financing for retail properties in the first three quarters was roughly unchanged at 8.6 billion euros. Hotels and other industrial buildings fell by 15.7% to 7.5 billion. The situation in the retail sector remains difficult in view of the increase in online trade. In contrast, the accommodation sector is once again considered a growth area following the coronavirus slump.

The upward trend in residential property purchase prices that began at the start of the year is continuing. This is the result of an analysis also published on 28 November by data provider Sprengnetter. However, sellers had to reduce their price expectations in order to close a deal. In October 2024, purchase prices for single-family homes rose by 0.4% compared to the previous month, and by 2.8% year-on-year. There were clear differences between the major cities. In Berlin, prices fell by 3.1% year-on-year, while they rose by 0.3% in Frankfurt. The picture was more uniform for condominiums across Germany with +0.3% (month-on-month) and +1.8% year-on-year.