BERLIN (dpa-AFX) - After noticeable declines, residential property prices in Germany are hardly falling at all. This is shown by new figures from the Association of German Pfandbrief Banks (vdp), which represents the most important real estate financiers in this country. According to the vdp property price index, the price of apartments and houses fell by only 0.9 percent in the second quarter compared with the first quarter. Compared with the same quarter of the previous year, however, stood on average a minus of 5.4 percent, reported the association, which represents, among others, Deutsche Bank, Commerzbank and major savings banks, on Thursday. "The downward momentum of real estate prices has slowed noticeably," it said.

According to the report, prices for owner-occupied residential property fell only slightly in the second quarter (down 0.4 percent on the previous quarter), while the markdowns for multi-family houses were somewhat larger. "There are signs of stabilization in the residential real estate market," vdp CEO Jens Tolckmitt told Deutsche Presse-Agentur. One reason, he said, is that construction interest rates have recently settled at elevated levels. "There is growing confidence in the market that long-term lending rates will not rise much further."

The main reason for the recent drop in real estate prices is sharply higher lending rates, which make financing more expensive. According to the Federal Statistical Office, houses and apartments had still fallen in price by an average of 6.8 percent year-on-year in the first quarter and by 3.1 percent compared with the previous quarter. Official data for the second quarter is still pending.

According to the study, residential property prices in the seven major cities have now fallen by an average of 1.1 percent compared with the previous quarter and by 5 percent year-on-year. The smallest reductions were in Berlin with minus 3.6 per cent within a year. The highest price declines were recorded in Frankfurt (minus 9.1 percent), Munich (minus 6.7) and Hamburg (minus 6.4). Only in Düsseldorf did prices rise minimally (plus 0.1).

The vdp index is based on data on real estate transactions from more than 700 banks and is more meaningful than analyses based on advertisements. This is because real estate sales are negotiated and deviations from the asking price are common.

Meanwhile, upward pressure continued in the rental market, to which many people turn by necessity. New contract rents rose a strong 6.2 percent in the second quarter compared to the same quarter last year. "Demand for housing remains high," Tolckmitt said. Berlin topped the list of metropolitan areas with a year-over-year increase of 9.5 percent. "For years, too few apartments have been built in Berlin measured against the influx," Tolckmitt explained.

According to vdp calculations, the price declines for commercial real estate were again particularly large, with minus 10.3 percent compared to the same quarter last year and minus 2 percent compared to the previous quarter. While the trend towards home offices is weighing on office properties, retail is suffering from online shopping and consumer restraint in inflation./als/DP/zb