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Real estate

Analyses of the situation in the construction sector and studies on the real-estate market both in Germany as a whole and in selected centres in Germany and abroad.

31 Documents
November 4, 2019
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German exports and global trade have been moving in lockstep recently and more or less grinded to a halt in yoy terms. We found that the Bundesbank’s leading indicator for global industrial production leads German exports by 4 to 5 months. Recent declines in this indicator do speak against a recovery in German exports before the end of Q1 2020, despite recent signs of stabilization in German foreign order intake. (Also included in this issue: house prices in Germany, labour market, automotive industry and German politics) [more]
1
August 19, 2019
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We see Germany in a technical recession, as we expect another ¼% GDP drop in Q3. Our forecast for 2019 is now 0.3%. Given no indication for a rebound we lowered our 2020 forecast to 0.7%. We acknowledge these revisions do not properly account for the recent accumulation of risks. Given the increasingly fragile state of the global economy, the realization of one or more risks could easily push the economy into a completely different scenario, where growth revisions of a few tenths of a percentage point will not be sufficient. (Also in this issue: German automotive industry, chemical industry, house prices, corporate lending, the view from Berlin, digital politics.) [more]
2
June 18, 2019
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Mortgage loans in Germany have risen to EUR 1,240 bn in recent years (+29% since 2011) thanks to the strong economy and falling interest rates. To account for increased risks for the banks, supervisory authorities decided at the end of May to activate the countercyclical capital buffer for the first time. E.g., almost half of all new loans now have a rate fixation period of more than 10 years. Banks’ business with private households got off to a strong start in 2019. Net lending in the first quarter amounted to EUR 8.8 bn and deposits increased by EUR 21.8 bn, both record figures for the beginning of the year. Both mortgages and consumer loans grew strongly. [more]
3
March 14, 2019
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The house price cycle in Germany should remain in place in 2019. But we expect much more divergence across regions and a heavily increasing complexity of causal impact channels. Led by immigration and the continuous labour market uptrend, house prices and rents will likely continue to rise. The risk of overvaluations and a full-blown price bubble in the German housing market is rising. However, the price uptrend is likely to continue for years to come, in Germany as a whole and in most major cities. In this report we look at the housing markets in Munich, Berlin, Frankfurt, Hamburg, Düsseldorf, Stuttgart and Leipzig and we comment on the German office market. [more]
4
January 16, 2019
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Berlin found it difficult to adapt to the market economy after Germany’s re-unification. Both parts of the divided city, the eastern and the western, had to cope with fundamental changes – the eastern for obvious reasons, the western because it had benefited from generous subsidies until then. Berlin has therefore been lagging behind the rest of western Germany for decades. By now, however, it is not only catching up with western German metropolitan areas, but even beginning to overtake them. Employment growth in cutting-edge industries suggests that Berlin is truly becoming an innovation hub. And this development serves as an excellent basis for the residential market. While we mainly focus on developments in 2018 in this article, the house price trends are likely to remain in place for some time to come. [more]
5
December 20, 2018
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Germans are known as heavy cash users. In 2017, they paid cash for most of their purchase transactions. If they do not use cash, they prefer to pay by direct debit or card. Credit transfers and e-money payments are used less often. Germans initiated almost one fifth of cashless payments via the internet. Mobile payments were rarely used but this will likely change given a number of new mobile payment services came on the market in 2018. In Q3, German households took out an impressive EUR 16 bn in net new loans, the highest quarterly figure since the introduction of the euro. Of this, EUR 13 bn came from mortgages, while consumer lending lost some pace. Deposit inflows were buoyant for a Q3 and German households increased their savings rate to 10.7%. [more]
6
October 19, 2018
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German households hold a higher share of their savings in bank deposits than their French or British peers. But their portfolios are more diversified than perception suggests if all low-risk/low-return investments are taken into account. They invest meaningfully in stock markets, both directly and indirectly. The recent upward trend though may be driven by the low interest rate environment. In Q2, household lending in Germany continued to grow dynamically at 3.8% yoy, driven solely by mortgage loans. However, mortgage growth has not increased much recently despite the benign economic situation and booming real estate markets. Consumer loans declined for the first time in five years. Meanwhile, deposits saw exceptionally large inflows, with maturities shortening further. [more]
7
September 4, 2018
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German economy in H2 still goldilocks despite external headwinds. We maintain our forecast of around 0.5% quarterly GDP growth in both Q3 and Q4, following average growth of 0.4% in H1. The H1 growth composition, however, marginally lowers the annual average to 1.9% (2.0%) and risks remain more skewed to the downside. In Berlin, the Groko agreed on an expensive social policy package. Albeit medium- and long-term financing of the package is not secured, FM Scholz came up with an additional, even more costly idea for extended pension benefits. A silver lining could be if the Groko managed to launch a law on labour migration. (Also included in this issue: German manufacturing industry, shortage of qualified workers in the construction sector, corporate taxes) [more]
8
June 11, 2018
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In April industrial production remained sluggish and new orders heavily declined, Q2 M&E investment growth could be restrained. No positive impulses are expected from net exports as long as international trade tensions continue. For these reasons, we have recently adjusted our annual GDP growth forecast from 2.3% to 2%. Impulses for Q2 growth should mainly come from the construction sector and consumption. Thanks to high wage settlements, private consumption should be again a key growth driver and the expansion of 17 consecutive quarters in a row is likely to continue. (Also included in this issue: lacklustre new construction, lending in Germany, the view from Berlin) [more]
9
January 26, 2018
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Metropolitan areas in Germany are booming. The current real-estate cycle started in 2009 and has led to significant price increases for residential property in many cities. Prices for apartments have as much as doubled in some cities. Strong population and employment growth and declining unemployment rates are driving demand, and supply elasticity is low. Overvaluations are rising, and the risk of a price bubble in the German housing market is increasing. The price uptrend is likely to continue for several years, at least in most major cities in Germany. [more]
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