Significantly fewer properties under the hammer

The number of foreclosures in Germany has been falling for a good ten years. The background to this is the low interest rates and the real estate boom in the metropolitan areas. Rising interest rates could change that.

About every second opened foreclosure auction does not end in the courtroom.

Dhe number of foreclosures fell significantly again in 2018. According to research by the Rating-based specialist publisher Argetra, 18,449 properties with a total market value of 3.85 billion euros went under the hammer in Germany last year. In 2017 there were 25,740 houses, apartments or land with a market value of 4.23 billion euros. This means that the number of foreclosures has been falling for a good ten years, reported the managing director of the Argetra publishing house, Axel Mohr.

Around every second opened foreclosure auction did not end in the courtroom last year either. Instead, the affected properties were sold beforehand, so that no foreclosure auction had to take place. For the evaluation, the experts examined foreclosures in more than 500 local courts.

Condominiums and one- or two-family houses made up the vast majority of real estate foreclosure with a share of a good two thirds (69 percent). Real estate disputes between heirs and divorcees were increasingly the background to the foreclosure auction. As a result, the share of so-called division auctions rose from 17 percent in 2017 to 18.4 percent last year.

“If interest rates rise, it will pop”

The background to the lower number of foreclosures is the current low interest rates, reported the managing director of the Argetra publishing house, Axel Mohr. However, there is concern about a possible turnaround in interest rates, which could make the extension of existing financing so much more expensive that for the first time since 2008 a significant increase in foreclosures can be expected. “If interest rates rise again, it will really pop,” said Mohr.

The very different developments in the individual real estate markets are already causing problems today. While houses and apartments in metropolitan areas such as Cologne, Frankfurt or Munich usually find a buyer quickly, many properties in rural regions are difficult or impossible to sell.

The federal German stronghold of foreclosures is Saxony-Anhalt with 104 dates per 100,000 inhabitants. Rhineland-Palatinate (100 appointments), Saarland (92 appointments) and Saxony (91 appointments) follow on the other places. The lowest rates are found in Hamburg (10 appointments), Berlin (18 appointments) and Bavaria (30 appointments). The nationwide average is 52 appointments.