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19 05 2016
Residential Property Prices Keep Rising

The persistently keen demand for residential real estate in German conurbations will cause condominium prices to increase by three to four percent before the end of the year, according to an estimate by the LBS state-owned home-building and loan associations. The assessment is based on a recent survey the LBS and German savings banks conducted among 600 real estate market experts. Reasons the LBS experts cited to explain the unchecked demand for investment-grade residential property include the sustained low-interest cycle, the very robust income and employment situation in Germany, and the steadily growing need for housing. Despite the stepped-up construction activity, current capacities keep lagging behind demand.

New-Build Flats Show Steepest Price Hikes 

The LBS experts registered noticeable price growth for recently completed apartments in all of Germany's major cities and campus towns as well as in popular tourist destinations. Among the metropolises, Munich topped the statistics with 6,500 euros per square metre, followed by Frankfurt and Stuttgart with 4,600 euros per square metre each, and Hamburg in third place with 4,350 euros per square metre. In cities like Dortmund, Hanover, and Dresden but also in Leipzig and Essen, square-metre prices straddle a moderate range of 3,000 euros per square metre or even less. Berlin has so far offered a balanced bandwidth of affordable housing, or so the LBS figures suggest. For investors, a price average of 3,500 euros per square metre for new-build property in Berlin implies a sound capital appreciation potential. Existing flats here actually have an average price tag of only 2,600 euros per square metre. So the price gap between existing and newly constructed schemes (which tend to satisfy higher standards) remains as wide as ever.

Investing in Residential Property in Berlin still a Paying Proposition 

According to the latest assessment by the LBS, investing in a residential property in Berlin will still be sure to include a margin for appreciation. The fact that such a margin exists becomes particularly conspicuous when you compare Berlin with other European capitals, or even with other major cities in Germany. It is underlined by Berlin's outlook of sustained demographic growth. And the sound economic data and the global appeal of Germany's first city also call for optimism. In short, there is plenty of reason to assume that residential real estate in Berlin will remain a sensible investment for some time to come.