German property foreclosures continue to fall nationwide

Figures released by specialist publisher Argetra Verlag show the trend of foreclosures and forced auctions continuing its long-year falling trend. The number of proceedings opened against property assets (houses, apartments and land) and their owners was 13,163, representing a total market value of a good €2.9bn.

In the same period last year, the corresponding figure was 14,800 properties valued at €3.15bn. Argetra analysed data from foreclosure auctions across all of Germany's nearly 50 district courts.

Last year (2021), an average of 32 out of 100,000 households in Germany were affected by foreclosures. Two-thirds of the foreclosures were of residential properties, with the lion's share being one- and two-family houses, followed by condominiums. The remaining third was accounted for by land, among other things.

About half of all legal foreclosures actually ended in court, with the other half of open cases ending in a prior sale. Saxony-Anhalt headed the list of affected states, with 62 foreclosures per 100,000 households, a rate nearly three times as high as its southern neighbour Bavaria.

Argetra is expecting the foreclosure rate to rise this year, in anticipation of interest rates rising along with inflation. Additionally, state aid granted as part of the COVID support measures is expiring, and a lot of financing is now precarious due to the high property prices.

"The fact that around 40% of these financings are structured with variable rates means that financing costs are likely to explode as interest rates rise," Argetra warned. "Irrationally inflated property prices increasingly form an explosive cocktail with recklessly granted financing."

The number of foreclosures in Germany has been falling steadily for years, notwithstanding the pandemic, largely due to the strong economy and low interest rates, which has both kept the loan burden low and driven demand for property nationwide.