Berlin
Gathering gloom: German house prices slid by an annual 6.8% in the first quarter, the steepest fall since records began in 2000. The worst declines occurred in the seven biggest cities, where the cost of single- and two-family houses slipped by 10.4%. Tighter credit has dented confidence and demand: the best rate available on a new ten-year mortgage is now 3.39%, a far cry from 0.43% at the start of 2021. Interestrate rises, along with China’s lacklustre recovery and concern over a recession in the US, have combined to cause a recession.
Revised figures show that the economy shrank by 0.3% in the first quarter following a contraction of 0.5% in the last three months of 2022; two consecutive quarters of shrinkage is the technical definition of a recession. GDP is now smaller than it was before the pandemic. A slide in business confidence in June (the second successive monthly decline), shaky domestic demand, and the prospect of further interest-rate hikes by the European Central Bank
