Purchaser profiles may be changing, but there’s only one direction all this is heading: residential property prices in Germany are still on the up.
It comes as no surprise right now that residential property prices are still on the increase. Current studies and a glance at the Europace market price index indicate one dominant trend. Residential property prices for existing houses, new-build houses and condominium apartments rose almost in unison this October, but the price hike in the new-build segment remains ahead of the pack. This index score rose by 1.51 points over the month to its current level of 175.65 points.
Prices for existing houses continued to catch up with a current index of 155.34 points, which is the greatest individual increase at 10.82% higher than the previous year. Prices for condominium apartments have also risen by a huge 9.85% year-on-year, but this month’s hike of 0.82% is actually the lowest of all three categories. But they’re all on the up: the overall index rose by a further 0.85% in October, which is an increase of 9.57% compared to the same month the previous year.
A current study by the German Economic Institute on the topic “Socio-economic determinants of residential property ownership” shows that whilst residential property prices continue to rise, the number of property owners is actually stagnating. According to the report, and as is widely known, Germany has a very low proportion of property ownership on an international comparison (< 50%). At the same time the population is continuing to migrate into the towns and cities and now also into the surrounding regions, where prices are rapidly rising to match those in more central locations.
To what extent this development will affect property prices over the next few months is examined by Stefan Kennerknecht, board member of Europace AG:
“Scarcity of supply continues to determine the market, and that is unlikely to change any time soon. In fact we believe that prices will continue to rise throughout the next few months. We have also noticed a change in client requirements for some time now. In the case of new financing deals, the average residual debt at the end of the fixed interest rate period has risen significantly, in fact it has almost doubled over the last 10 years with the most significant escalation over the last three years. According to our analyses, consumers now face a residual debt of over €90,000 from their first property loan. Our objective is to support banks and brokers with an appropriate digital tool with which to provide their clients with optimised debt rescheduling and follow-up financing, and the low interest rate environment offers consumers attractive opportunities in this regard.”
For all Europace indices, Europace studies and Europace trend barometers, visit the website https://report.europace.de/
