House prices up 12.14% during the year to Q3 2020
Germany’s house price boom continues strong, as the economy recovers from its worst-ever recession caused by the coronavirus pandemic. The average price of apartments rose by a huge 12.14% during the year to Q3 2020, following y-o-y rises of 10.85% in Q2 2020, 12% in Q1 2020, 11.15% in Q4 2019, and 9.46% in Q3 2019. On a quarterly basis, house prices increased 4.55% in Q3 2020.
Strong demand, rising construction activity
Demand remains strong, buoyed by low interest rates, urbanization, and healthy household finances. In recent years, the migration crisis and strong economic growth have added to the already strong demand in the country.
In fact despite the pandemic, residential construction activity continues to rise. In the first three quarters of 2020, dwelling permits rose by 5.7% y-o-y to 238,899 units, following a 1% growth in 2019, according to the Federal Statistical Office (Destatis).
Rents, rental yields: moderate yields at 2.9% to 3.7%
Berlin apartment costs are around €4,991per sq. m.
Germany: city centre apartment, buying price, monthly rent (120 sq. m.)
|Buying price||Rate per month||Yield|
|Berlin||€ 598,920||€ 1,493||2.99%|
|Frankfurt||€ 544,680||€ 1,678||3.70%|
|Munich||€ 942,360||€ 2,243||2.86%|
Recent news: The German economy grew by a record 8.2% in Q3 2020 from the previous quarter, amidst higher consumer spending, capital formation, and exports, according to Destatis. This is in sharp contrast to q-o-q declines of 9.8% in Q2 and 1.9% in Q1. Yet on an annual basis, the economy contracted by 4.3% in Q3 2020.
The government recently revised up its economic forecast for 2020, and is now expecting a GDP decline of 5.5%, an improvement from its previous estimate of a 5.8% contraction. Similarly, the European Commission also revised upwards its 2020 GDP forecast from Germany to -5.6%, from its earlier projection of -6.3%.
Unemployment stood to 4.5% in September 2020, and remains at the highest level since December 2015 but is still lower than the EU’s average jobless rate of 7.5%. This is equivalent to about 2 million unemployed people in Germany.