Condominium Prices Soaring, Sales of New-Build Units Plummeting
While a number of experts have been predicting that residential property prices will level out or even decline in Germany’s major cities, condominium prices just keep on rising nonetheless. Indeed, they appear to have gathered considerable momentum lately, as the recently published ACCENTRO Homeownership Report 2019 shows.
According to the report findings, the average selling price for condominiums in major German cities was 253,674 euros, and thus 6.82 percent higher than the year before. This compares to an average selling price increase of merely 4.52 percent in 2017. The ACCENTRO Homeownership Report analyses condominium transactions in Germany’s 82 most populous cities. To this end it relies on data provided by each city’s property valuation committee.
Rise in Revenues despite Slowdown in the Number of Sales
The rise in selling prices caused the sales volume in 2018 to experience a one-year increase by 4.14 percent to 31.57 billion euros. As recently as 2017, the year-end total had shown a modest decline in sales. However, the decline in the number of transactions in 2018 continued the downward trend from the previous year. The total number of sales decreased by 2.51 percent. The fact that the dip coincides with hefty price growth makes it reasonable to conclude that the decline in the number of sales is not caused by a drop of demand for condominiums but by short supply.
The findings of the ACCENTRO Homeownership Report 2019 indicate moreover that the supply shortage is not about to change in the near future, not least because the number of new-build condominiums coming onto the market is in steady decline. In 2018, the number of new condominiums sold took something of a nosedive as it dropped by 11.62 percent. This trend is expected to persist for the time being because the number of planning consents issued for condominiums also declined by almost eight percent during the first half-year of 2019, according to the Federal Statistical Office.1
Berlin is Booming
Quite obviously, condominium development continues to be out of step with demand, and the situation is driving the brisk dynamic of selling price growth in German cities. The discrepancy between supply and demand is particularly conspicuous in Berlin. In 2018, the number of condominium sales in the German capital declined by 21.24 percent year-on-year.
The supply shortage behind this development also caused an above-average price hike in Berlin as condominiums became 21.83 percent more expensive and average price tags climbed to 321,578 euros. As a result, Berlin has now become the fifth-most expensive city in Germany.