EPX shows price rises slowing, but cities continue upward march

The Europace Hauspreis Index (EPX) from listed Berlin-based fintech Hypoport AG is one that we have tracked carefully for nearly ten years here at REFIRE, based as it is on real-life property transactions as measured by Hypoport's own very respresentative financing platform.

The latest figures for June show existing home rising marginally by 0.62% over May, when they fell back by 0.51%. But the chart does show that existing one- and two-family homes in June 2017 were actually cheaper than the same time last year – the first time in more than seven years that this has been observed. According to the EPX, their average price was 1.03% lower than this time last year. Over the same period, however, new-built one- and two-family houses rose in price by 11.44%. Should German homeowners be starting to worry about a real fall in values of their properties, as doom-mongers have been fretting for a while?

Thilo Wiegand, board chairman at Europace AG, believes the majority of homeowners have no undue cause for concern. "Anybody looking for a second-hand property at the moment will be very surprised to hear about falling prices. The market is far more conditioned to demand outweighing supply, which is pushing up prices. This is certainly true for any large city, and most of the mid-sized cities. But it's not true everywhere. In rural regions with falling populations, the lack of demand is causing the prices to fall."

As a result the level of prices for second-hand homes varies widely from region to region, as documented by Hypoport's Dr. Klein Trend Indicator (FTI), a key component of the Europace EPX Index based on actual mortgage transactions brokered by the group's Dr. Klein network of bricks-and-mortar offices across the country.

For apartments nationwide, the story is very different, with the EPX sub-indicator for apartments (condominiums) up 1.75%, and a much more understandable 8.65% increase year-on-year. This has contributed to keping the EPX still on its relentless upward march (see chart in this issue).

At REFIRE we have tracked the monthly Europace Hauspreis Index EPX since its inception in 2005, since it is based on actual property financing transactions from the EUROPACE financial marketplace. EUROPACE now transacts about €45bn annually, or more than 15% of all privated mortgages issued in Germany. It is the largest platform in Germany for mortgages, building society products and installment credit, with more than 400 financial institutions providing products and services to its network.