Real estate markets

Unparalleled mood on the German property market

German Olympians have not quite found their groove in Rio. Germany is yet to reach double figures in the medals table and therefore has quite a way to go if it hopes to match its sporting achievements of the past. By comparison, after many years of decline, the current mood in the domestic property market can almost be considered record-breaking. This is reflected in the property price index for the second quarter that has been released by the Association of German Pfandbrief Banks (vdp). This reports a year-on-year increase of 6.3% in the vdp price index for owner-occupied housing, which is the strongest improvement since the index was first compiled in 2003. Even greater growth of 7.3% was recorded for condominiums, while the rise for single-family and semi-detached houses was slightly lower, at 5.9%. Overall, price rises are therefore considerably higher than at any point in the recent past, moving…

The German housing market is gradually heating up

The strong surge in housing prices continued in Q1 2016. The prices for owner-occupied homes rose on the year by 4.7 percent, the growth rate in multi-family dwellings was even more pronounced, at 8.0 percent. In the big cities, price increases cooled in the interim but have since picked up again, with owner-occupied flats becoming some 9 percent more expensive.  Neither the fact that prices have already rocketed nor the tangible expansion in residential construction were able to dampen the price hike. Four factors have driven this: Firstly, the basic economic conditions for the housing market are better than at most points in the past. Secondly, the interest rate slide results in lower mortgage payments, despite the increase in house prices.  Thirdly, rental returns that can be achieved in the housing market remain a much-sought alternative to the bond market. And fourthly, housing supply is still tight, as, despite the…

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