House prices in Germany in the third quarter of 2023 recorded the most serious fall since data began to be published in 2000, as rising interest rates and rising material costs weighed on the real estate market, Reuters and Agerpres reported.

According to data published on Friday by the Federal Statistical Office (Destatis), residential property prices fell by 10.2% annually between July and September 2023, the fourth quarter in a row. A particularly significant drop was observed in large cities, where prices for apartments fell by 9.1%, and houses for one or two families fell in price by 12.7% in annual terms.

Data for September earlier showed that house prices in Germany fell more than during the great financial crisis of 2007-2009.

For a decade, low interest rates fueled a real estate boom in Europe’s largest real estate investment market. But rising interest rates and rising prices for building materials have led to the biggest real estate crisis in decades, with a number of developers going bankrupt.

“By 2022, there was a speculative bubble in Germany, one of the biggest in the last 50 years. Prices have been falling since then, now the bubble has burst,” said Kostyantyn Kholodylin from the German Institute for Economic Research (DIW).

Other data released on Friday showed a 6.3% decline in orders in the construction sector in October compared to the previous month.

The German Construction Industry Federation warns that further layoffs are expected in the housing sector.

Austrian real estate giant Signa, which has a significant presence in Germany, filed for bankruptcy last month in the region’s biggest real estate collapse.