House prices up 11.42% during 2020

Germany’s house price boom continues unabated, as the economy recovers from the recession caused by the coronavirus pandemic. The average price of apartments rose by a huge 11.42% during 2020, following y-o-y rises of 11.15% in 2019, 6.78% in 2018, 4.45% in 2017, 6.86% in 2016, and 7.62% in 2015. On a quarterly basis, house prices increased 2.29% in Q4 2020. 2.

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 eleven months of 2020, dwelling permits rose by 4.8% y-o-y to 294,739 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: Germany’s economy contracted by 5% in 2020, less than expected and a smaller decline as compared to the 5.7% contraction recorded during the global financial crisis, as massive government stimulus measures helped lessen the impact of the COVID-19 pandemic. The European Commission expects German economy to grow by 3.2% this year and by another 3.1% in 2022.

The unemployment rate (seasonally-adjusted) stood at 4.6% in December 2020, sharply up from just 3.3% during the same period last year but still lower than EU’s average jobless rate of 7.5%. This is equivalent to about 2 million unemployed people in Germany.