House prices up 9.46% y-o-y in Q3 2019
Germany’s housing market remains robust, with the average price of apartments rising strongly by 9.46% during the year to Q3 2019, an improvement from last year’s 5.15% growth. In fact, it was the biggest y-o-y growth since Q2 2016. On a quarterly basis, house prices increased 3.34% during the latest quarter.
Strong demand, low construction activity
Demand remains strong, buoyed by low interest rates, urbanization, and healthy household finances. Recently, the migration crisis and strong economic growth have added to the already strong demand in the country.
Despite this, construction activity remains weak. In the first eight months of 2019, dwelling permits fell by 2.5% to 228,500 units compared to the same period last year, according to the Federal Statistical Office (Destatis).
Rents, rental yields: moderate yields at 2.9% to 3.7%
Berlin apartment costs are around €4,991per sq. m.
Germany: city centre apartment, buying price, monthly rent (120 sq. m.)
|Buying price||Rate per month||Yield|
|Berlin||€ 598,920||€ 1,493||2.99%|
|Frankfurt||€ 544,680||€ 1,678||3.70%|
|Munich||€ 942,360||€ 2,243||2.86%|
Recent news: Germany’s economy registered lacklustre growth in 2018, with real GDP growth of just 1.4%, down from 2.2% in 2017 and the weakest expansion in five years, according to Destatis. Europe’s largest economy continues to struggle this year, with GDP rising by a meagre 0.7% in Q1, 0.4% in Q2 and 0.5% in Q3. In a quarterly basis, the economy barely grew by 0.1% in Q3 2019, narrowly avoiding a technical recession following a 0.2% contraction in the previous quarter.
Accordingly, Germany’s export-reliant economy was hit by the falling global demand for capital goods, with political uncertainty and structural changes in the automotive industry adding to the burden. The government recently cuts its growth projection this year to 0.5%, half the pace previously forecast.