Taking a look at the Property Market Index 2015 of the consultant and analyst firm Bulwiengesa, you will see that the German market for residential properties is continuing its upward trend. According to the Bulwiengesa analysis, the last year’s growth rate of residential properties of 4.2 % is slightly lower than the level of growth recorded in 2014 (+5.3 %). Properties were favourably purchased last year, particularly requested were new owner-occupied apartments. This segment recorded an annual increase in value of 6.1 %.To give a comparison, terraced houses solely increased by 5.7 % and land properties for single-family homes only by 3.1 %. The study shows that excess of demand still remains considerable, especially in regions subject to high-growth.
Rents Continue To Rise Sharply
When re-letting an existing apartment, landlords could achieve a rental increase of 3.3 % last year. That was slightly more than it was the case with newly built apartments (3.2 %). According to the Property Market Index, this high demand was due to the growing number of immigrants, increasing income levels and a policy of persistently low interest rates. Although the market finally responded to this by an increasing number of housing completions, they have been, however, far below the expected requirements.
Berlin’s Housing Market On Course For Further Growth
Last year, according to the Property Market Index not only the rents showed a significant rate of increase. Newly built condominiums in Berlin recorded a substantial growth rate, too. This is the result of the two studies on owner occupied-apartments “Berlin-West 2015” and "Berlin-Ost 2015” carried out by Bulwiengesa. Accordingly, last year price quotations for condominiums in Berlin-West grew by an average of 13.4 % setting a new record value in terms of a weighted average of EUR 5,330 per square metre. In the prime location ranking, Wilmersdorf is number one in terms of quoted prices (the city ranks No. x). In the eastern inner-city districts of Germany’s capital, quoted prices for condominiums increased as well, even though not as strongly as in the western part of the city. The average price per square metre accounted here for EUR 4,170, representing an increase of roughly 2.8 %. Prenzlauer Berg takes the lead in terms of quotation prices, closely followed by Mitte.
3.7 % Price Growth Across All Segments
With an increase of 3.7 %, the German Real Estate Market could record over all segments appreciable price growth rates in the last year. The Property Market Index analysing real estate market developments on the basis of 125 German cities, proceeds so its positive trend for the 11th consecutive year.
Trend Towards Growth Will Continue
There are no signs of an end to the upward trend. On the contrary, high demand will lead to further price increases but also to an ongoing high construction activity. Furthermore, foreign investors are expected to strengthen their activities on the German real estate market taking advantage from low interest rates and favourable currency effects. Given the low interest policy of the European Central Bank, investors are looking according to the study for profitable investments and real estate still remains a lucrative investment.