We track closely the Europace House Price Index EPX as a reliable indicator of German house prices. One of the main reasons is that it is based on actual house prices achieved in sales, rather than advertised prices - which, of course, may or may not meet the seller's expectations.
The EPX is based on data gathered from the Europace platform, which handles in the region of 10% of Germany's private mortgage financing. REFIRE has been reporting on this index almost since the beginning, back in 2005.
The latest figures from May show the EPX index continuing its relentless upward trend, with the strongest growth being recorded by condominiums (Eigentumswohnungen). This follows a slight dip in the pace of growth in April, but it looks as if the price rally is picking up where it left off. Condominiums are now relatively more expensive than houses, particularly new-build houses, where demand has slowed down.
The EPX Index, which tracks transaction prices for new-build and existing condos as well as detached and semi-detached houses, saw a rise in all its sub-segments in May, while the overall index rose by 1.34% to 199.34 points - almost reaching the 200 mark. Compared to May 2020, that's an increase of 12.30%.
With a growth rate of 1.73%, prices for condominiums saw the biggest rise in the current EPX after a brief dip in momentum in April (up 1.02%): The index value rose from 204.06 points to 207.60 points in May. Compared to the previous year, condos recorded a plus of 13.73%.
The previous year's growth in condominiums is still surpassed by existing houses - they rose by 15.22% in the index and reached 192.01 index points in May. However, in a monthly comparison, existing one- and two-family houses could not keep up with condominiums with a plus of 1.36% compared to April.
The Europace figures show that new single-family and two-family houses were already recording weakening growth in April, a trend continued in May with moderate growth of 0.92 per cent to currently 198.41 index points. This represents a year-on-year rise of 8.21%.
According to Stefan Münter, the co-CEO of Europace AG, the figures reflect a slight shift in the supply of new homes coming from new-build versus second-hand properties. "The curbed price development in the new-build segment must be seen in the context of the development of existing homes", he said. This was becoming apparent in the March reading, with the new-build component of the index (up 1.95% to 187.04 index points) starting to lose ground against existing properties.
Further figures released in April by Destatis, Germany's Federal Statistics Office, show that residential property prices in Germany rose more strongly in the fourth quarter of last year than in any previous quarter since 2016, at 8.1% versus the previous year's quarter.
Then, it was prices for detached and semi-detached houses that were rising the most. In Germany's Big 7 cities - Berlin, Hamburg, Munich, and Cologne along with Frankfurt, Stuttgart and Düsseldorf - these rose by 12.1% compared to a year before, 2019.
Prices also rose strongly by 11% in sparsely populated rural districts and by 9.8% in more densely populated ones. Condominium prices rose the most in the more densely populated rural counties, up 8.9%, according to the Destatis' House Price Index. For the Big 7, condos showed a plus of 8.1%.
A chart by Destatis going back to 2010 shows that there were only two quarters in which the house price index moved up more sharply than in the fourth quarter of 2020: in the third and fourth quarters of 2016, the index rose by 8.4% each compared to the corresponding periods of the previous year.
