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.
Talking Point
Fewer crisis spots on the euro-area housing market
The massive overvaluations on the euro-area market for residential real estate (as measured by the price-income ratios for 2007 and 2008) are a thing of the past. Currently, house prices are excessive only in several smaller countries. However, this situation is likely to change towards the end of the decade if the dynamic uptrend in German house prices continues as expected. [more]
Germany Monitor
Outlook on the German housing market in 2017: Prices and rents in Berlin, Düsseldorf, Frankfurt, Hamburg and Munich
Munich remains the most dynamic German city when it comes to property, with its fast-rising population and historically low vacancy rate likely to lead to further price increases for many years to come. Further price rises are also expected in Berlin, although the main factors at play here are the very buoyant labour market and the fact that prices and rents are still relatively low for a European capital city. Of the German cities that were analysed for this report, Frankfurt has shown the lowest increase in prices in the current cycle. However, we are now seeing a Brexit effect, which is driving up prices for family homes in particular. Sluggish rent growth and a high level of construction activity are the most striking trends in Hamburg, which could make the city more sensitive to interest rate movements than other urban centres. The situation is similar in Düsseldorf, where the vacancy rate in the current cycle is relatively high for a large German city. For every city analysed here and for the overall German housing market we anticipate further price increases in the coming years. All the macroeconomic conditions that might signal an end to the cycle – such as a turnaround in interest rate policy, a massive expansion of supply and/or a slowdown in migration to Germany – are not yet fulfilled and it is likely to be several years before they materialise. Consequently, we expect rents and property prices in the major German cities and across the country to continue to rise sharply in 2017. [more]
House prices
Focus Germany: 2016 GDP growth: External headwinds & domestic tailwinds
In 2015, the prices for apartments in the 126 most important German towns and cities rose by 6% yoy again significantly outstripping rents. Among the major cities, Munich, Stuttgart and Hamburg recorded larger price rises between 2009 and 2015 than, for example, Cologne and Düsseldorf. Frankfurt was at the bottom, while Berlin was in the middle, but could catch up in the future. Measured by affordability indices residential property prices have been below their historical averages until now. The anticipated price rises of 6% in 2016 are likely to bring the normalisation to an end. Owing to the high and likely increasing level of excess demand house prices are likely to continue to rise. As a result, they are expected to become overvalued increasing macro-prudential risks significantly. (go to p. 14) [more]
Real Estate
Construction investment: Sharp increase expected, but focus on downside risks
Despite the unbroken upswing in the real estate market since 2009, construction investment has grown only moderately at around 3% per year. This corresponds to a relatively low price elasticity of only about ½, since prices have climbed by roughly 6% per year. This expansion of construction investment started from a low level. As a percentage of gross domestic product, German construction investment is relatively low both by historical and international standards. (go to page 5) [more]
 
 
Cities
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