Condominiums: Turnover increases while transaction numbers remain consistent
The number of sold new- and old buildings slightly decreased in German cities in 2016 compared to the previous year. This was determined by the recent ACCENTRO Homeownership report, which was published on the 13. September. According to the report, there were sold 135 551 new- and old buildings in the year under review, which was 2016, in a total of 82 analyzed cities. This is a decrease in 851 condominiums (- 0.62%) compared to the previous year. At the same time the turnover increased by 7.13 percent to 30.87 billion euro.
According to the report the development in building new properties is remarkable. Contrary to the overall trend, the number of sold new-build condos raised by 14.49 %. The report states that this increase is due to the fact, that the residential construction rose strongly in 2016 so that there were more condos finished than in the previous years. In some cities, as for example Berlin, the restrictive tenancy law is causing more investments in new- than in old-buildings. The increases of protected areas are making investments in the portfolio more difficult. Government policy is also criticized due to their law regulations considering new-buildings.
Strong migration into cities
However, Berlin is on a ten year comparison the city with the biggest price increases. The average price for a sold condo increased from 2006 to 2016 by 160.26 percent. The highest purchase prices were achieved in Munich with an average of 422 176 Euro. The development of the city Leipzig in Saxon was highlighted. In 2006, a total of 2 542 condos were sold, while 10 years later 4 877 condos were sold. That’s an increase in sales by 91.86 %.
In general the ACCENTRO Homeownership report states that the population is tending to live in big cities. In 2016 more than 370 000 people moved into big cities. This trend might continue in the upcoming years.
The ACCENTRO Homeownership report criticizes that home ownership is not making any progress even though the property loans are available at favourable terms. The home ownership rate stagnates since years at 45 Percent in Germany, even if home ownership is an important part of the private pension plan. Suggestions suppose that an exemption on the property transfer tax is made to lower the side costs of the purchase in order to raise the number of home owners.