Europe's largest housing provider, Vonovia, has reported a staggering €6.8 billion loss for the previous year. This substantial setback is not due to a decline in demand for housing, which remains high with a vacancy rate of a mere 2%. Rather, the loss is primarily attributed to a significant drop in real estate prices.
For an extended period, real estate companies like Vonovia enjoyed steadily increasing property values. However, this trend reversed in mid-2022 when the European Central Bank raised interest rates. Data from the Association of Pfandbrief Banks indicates that apartment building prices have decreased by roughly 10% on average. Vonovia's properties saw an even sharper decline of 11.4%, resulting in a loss of nearly €11 billion. This downward trend has made a significant impact on balance sheets for Vonovia and other housing providers.
Vonovia CEO Rolf Buch described the past year as "exhausting", citing the "most serious" value depreciation the company has faced. Despite market volatility, Buch expresses optimism, believing that the worst of the value decline is over and stability is returning. He anticipates a long-term upward trajectory in the future, driven by Germany's persistent housing shortage.
