German Landlord TAG Warns Home Prices Could Fall 30%

German home prices could fall as much as 30% below their 2022 peak, one of the country's largest landlords told Reuters, in a more pessimistic assessment than rivals, highlighting the continued threat posed to Europe's biggest economy, according to John O’Donnell, Tom Sims, and Matthias Inverardi's report for Reuters.

Germany is Europe's biggest residential property market.

TAG Immobilen co-CEO Martin Thiel painted a bleak picture for Europe's biggest residential property market, which has already seen prices tumble by around 10% in Germany's worst property crash in a generation.

"We expect further losses in value," Thiel said, adding that while he expected the fall in valuations to bottom out at 20%, TAG was taking precautions for worse.

"You have to be prepared in case it is not the 20% but 25% or 30%. The balance sheet must be able to withstand that. You simply need that cushion," Thiel said in an interview. "The market for transactions is incredibly difficult," he said.

"You hardly see any big transactions."

Germany's 670-billion-euro ($722 billion) property industry is a critical pillar of its economy, contributing one in 10 jobs, nearly a fifth of output, and eclipsing the country's famous car sector, according to the ZIA industry association.

Thiel said that after writing down the value of TAG's portfolio of 85,000 German homes by 13% since the middle of 2022, he expected a total drop in value of 20% by June.

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