When property prices fall

Short answer #

A price decline hits equity disproportionately while debt is high. Deduct selling cost and remaining debt from a cautious sale price and check whether a sale is actually planned.

Important variables #

• Price, rent and holding period
• Rate, principal and remaining balance
• Buying, maintenance and selling cost
• Appreciation and alternative return

Worked example #

A €480,000 purchase, −10% price change, 7% selling cost and €400,000 debt leaves only about €1,056 net proceeds.

Break-even: What changes the result? #

Test the main driver as a cautious, central and optimistic range. Also check whether the ranking reverses at a crossover or remains robust across the range.

Common mistakes #

• Comparing mortgage payment directly with rent
• Omitting transaction cost or remaining debt
• Treating appreciation as guaranteed

Sources & assumptions

• Deutsche Bundesbank — Bank Lending Survey Germany, July 2026 (2026-08-17)
• RATIOXA — Methodology and formulas (2026-08-17)