According to the Financial Times, the construction sector, which is struggling to cope with these unfavorable conditions, is looking to the German government for support. Moritz Schularick, President of the Kiel Institute for the World Economy, said: "After the property boom of the last 10-15 years, we have reached a critical point. The old financing models are now unsustainable and we are in a period where a new property developer goes bankrupt every day".
Among the companies that have filed for bankruptcy in recent weeks are Düsseldorf-based Gerch, Centrum Group, Development Partner, Euroboden from Munich and Project Immobilien Gruppe from Nuremberg.
At the same time, companies such as Vonovia and Aroundtown, which are large property owners, have seen large falls in the value of their property portfolios.
"Interest rates have risen sharply and many projects are no longer viable. Demand for housing has also completely collapsed," says Mr Fuest.
Experts predict the situation could get even worse. "Those with the most debt are the most vulnerable and I expect the number of bankruptcies in the market to increase," said Dirk Salewski, chairman of BFW, the German Association of Independent Real Estate and Housing Companies.