The German Federal Bank (Deutsche Bundesbank) has provided an analysis of the developments in the German Residential Market in their Monthly Report February 2016 https://www.bundesbank.de/Redaktion/DE/Downloads/Veroeffentlichungen/Monatsberichte/2016/2016_02_monatsbericht.html. The analysis is based on research data published by other institutions like vdp (Verband deutscher Pfandbriefbanken) or bulwiengesa AG.
Price Development
Based on information by bulwiengesa AG, prices for residential properties in German cities increased by 6% in 2015 after 5.5% in 2014 and 7.5% in 2013. The prices increase for condos was 6.5%, higher than single and semi-detached houses. Also the price increase for multi-tenant blocks was higher than the annual average since the beginning of the recent upswing in the German property market.
The average price increase for residential properties across all types in big cities slowed down compared to previous years and was the same as in cities in general at 6.25%. The increase for apartment blocks was at 7.25% by 2.0% higher than the average since 2010.
Rent Development
For new rental contracts in cities the increase was at 3.25% close to the previous year’s figure whereas the rent increase for new built apartments slowed down. In big cities the slow down on both categories was discernable. Whether this was due to the rent cap introduced in 2015 in Berlin, Hamburg, Düsseldorf, Frankfurt a.M., Köln, München Stuttgart and several smaller cities and towns.
Economic and Financing Development
The steady economic development in Germany with positive outlook for income and employment supported a strong demand in the residential market. While the price-income-ratio for owned housing increased over the period of the last 3 years the average interest rate decreased in 2015 by 0.5% to fewer than 2%.
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