Deutsche Bank: the lull is over?

The slump on the real estate market in Germany could slowly be coming to an end. This is indicated by the latest data from the Association of Pfandbrief Banks. This is also an important segment for Deutsche Bank. The stock tested the recent uptrend yesterday.

According to the Association of German Pfandbrief Banks (VDP), the collapse in new business with loans for residential real estate has recovered somewhat. In the third quarter, the most important real estate financiers included in the VDP promised loans for apartments and houses with a volume of 16.9 billion euros – 13.4 percent more than in the second quarter. At the same time, new business with loans for commercial real estate recovered by 19 percent to 13.8 billion euros, as the association reported on Thursday. However, compared to the same period last year, there was a decline of a good fifth in both areas.

Compared to previous years, new real estate financing business remains at a subdued level, said Jens Tolckmitt, Managing Director at VDP. “However, we are now seeing an increase for the third quarter in a row.” This indicates a slight recovery. The association represents institutions such as Deutsche Bank, Commerzbank, Landesbanken, large savings banks and commercial real estate financiers.

New business with loans for multi-family houses recovered particularly strongly compared to the previous quarter, although from a low level. There were also increases in loans for one- and two-family homes and condominiums. Loans for office properties continued to fall sharply by a good 10 percent.

Sharply increased interest rates, high inflation and uncertainty surrounding the Ukraine war have brought an end to the long real estate boom in Germany. Real estate prices in Germany have fallen significantly. At the same time, private households are holding back on real estate loans: in the first half of the year, new business from banks was around 50 percent below the previous year’s level. The crisis, particularly in commercial real estate, is also affecting bank supervisors, who fear setbacks in the real estate markets as a threat to bank balance sheets.