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Foreclosures in Germany have surged, reflecting the broader economic turmoil of 2024. Sector specialist Argetra's latest report highlights a 9% increase in the number of foreclosures, with a corresponding 11% rise in market values, marking a notable shift in the property auction sector.
This upward trend, attributed to Germany’s prolonged recession, rising insolvencies, and geopolitical uncertainties, reflects the growing strain on property owners and the broader real estate market. The total market value of foreclosed properties reached €4.3 billion, with 13,445 cases recorded—up from 12,332 the previous year.
While the property market showed signs of stabilisation with a slight recovery in prices during the latter half of the year, the pressures on households and businesses remain evident. Average market values per auctioned property rose to €319,509, with stark regional disparities. Hamburg led with an average value exceeding €1.1 million per property, while Saxony-Anhalt recorded the lowest at €96,000. Residential properties dominated foreclosure proceedings, accounting for 69% of cases, with single-family and semi-detached homes forming the majority.
The economic backdrop paints a bleak picture. Germany’s GDP contracted for the second consecutive year, and unemployment is rising. These conditions, coupled with higher borrowing costs and a 24.3% increase in corporate insolvencies, have intensified financial pressures. Consumer insolvencies also grew by 8.5%, further contributing to the foreclosure surge. Notably, only 50% of initiated foreclosure proceedings reached the courtroom, as many properties were sold privately beforehand.
Concentration of foreclosures in central Germany
The regional dynamics of foreclosures reveal a concentration in central Germany, with Thuringia registering 59 foreclosures per 100,000 households—more than double Bavaria’s rate. Among cities, Berlin, Leipzig, Munich, and Stuttgart recorded the highest numbers of auctions, highlighting urban centres' vulnerability. However, smaller cities like Coburg, Würzburg, and Siegburg also emerged as foreclosure hotspots, reflecting a broader geographical spread of financial distress.
Partition auctions, driven by dissolutions of ownership communities, continued to play a significant role, contributing €2 billion in market values. This segment accounted for 39% of all appointments, reflecting the complex personal and financial circumstances influencing the market. Meanwhile, declining new construction rates have exacerbated housing supply constraints, further shifting demand towards second-hand and foreclosed properties.
Looking ahead, Argetra forecasts these trends to persist in 2025. While interest rate cuts by the ECB have provided some relief, their impact on mortgage affordability is limited, and property prices are unlikely to see a significant rebound. The market’s future trajectory hinges on broader economic recovery and policy consistency. For investors, the foreclosure market presents unique opportunities, but capitalising on them will require sharp focus on regional variations and careful evaluation of properties to secure long-term value.