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Homeownership Remains Attractive despite Rising Prices

Low interest rates and the lack of investment alternatives have been driving up prices on Germany's residential property market for some years now. According to figures published by the ImmobilienScout24 real estate portal, condominium prices have gone up by an average of 30 percent over the past five years. Still, investing in residential property remains a paying proposition in many German cities. A recent analysis done by the business paper Euro-am-Sonntag suggests as much. In addition to the price and rental growth in Germany's 100 largest cities, the paper took the housing shortage in each of the regions analysed into account, as well as the predicted demand for housing through 2030, and the rental yield. The data was then used as basis for a ranking that shows in which cities the outlook for buying real estate remains auspicious.

Brightest Outlook in Berlin

The outcome is unambiguous. Residential real estate located just beyond the city limits of the country's metropolises has the best performance outlook. Berlin is the one city that takes exception. While condominium prices in Germany's first city did rise at an average of 55.9 percent since 2010, the pace of the price growth differs from one borough to the next. For instance, prices in Reinickendorf and Steglitz grew not nearly as fast as price in Mitte.

Appreciation Driven by Keen Demand

At the same time, the housing shortage in Berlin is more intense than in any other German city, according to the analysis by Euro-am-Sonntag. Ongoing construction cannot meet the demand for housing accommodation in the steadily expanding metropolis. Since 2010, Berlin's population has grown at an annual average of 38,500 new residents. Accordingly, buying property is an investment with a very bright outlook. The survey predicts both secure rental income when buying to let, and a stable performance of the property as such.

The survey goes on to say that cities close to Germany's metropolises, such as the Frankfurt metro region, also offer great prospects. People in the suburbs of major cities can conveniently commute to their jobs in nearby cities and simultaneously benefit from the capital appreciation potential of their property, as the experts of Euro am Sonntag argued.