Trend: house prices up 6.96% y-o-y in Q2
Germany’s housing market remains robust, with the average price of apartments rising by 6.96% during the year to Q2 2017, from y-o-y rises of 5.79% in Q1 2017, 6.86% in Q4 2016, 8.64% in Q3 2016, and 9.9% in Q2 2016. On a quarterly basis, house prices rose strongly by 4.86% in Q2 2017.
Analysis: Insufficient construction to satisfy growing demand
The continued rise in house prices is mainly due to the strong demand, buoyed by low interest rates, urbanization, and healthy household finances. Further, low construction activity is also driving house prices up. In Q2 2017, dwelling permits dropped 7.9% y-o-y to 90,303 units, according to Destatis. The economy is expected to expand by 1.6% this year and by another 1.9% in 2018, according to the European Commission.
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||Rent per month||Yield|
Recent news: Germany’s economy grew by an annualized rate of 2.5% in Q2 2017, slightly down from the revised 2.9% growth in Q1 but outpaced the 2.3% average growth in the Eurozone, amidst strong domestic consumption and rising government expenditure, according to the Federal Statistics Office.