House prices up 9.59% during the year to Q1 2021
Germany’s house price boom continues unabated, as the economy recovers from its worst-ever recession caused by the coronavirus pandemic. The average price of apartments rose by a huge 9.59% during the year to Q1 2021, following y-o-y rises of 11.42% in Q4 2020, 12.14% in Q3, 10.85% in Q2, and 12% in Q1. On a quarterly basis, house prices increased 2.09% in Q1 2021.
Germany’s housing market has been growing continuously in the past six years, with house prices up by almost 67% from Q1 2014.
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 Q1 2021, dwelling permits surged almost 20% y-o-y to 95,916 units, following an annual growth of 2.2% in 2020, 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 shrank 1.7% in Q1 2021 from the previous quarter, as the government imposed extended restrictions and lockdowns to curb the spread of the pandemic. On an annual basis, Europe’s largest economy contracted by 3%. Despite this, the European Commission expects the German economy to grow by 3.4% this year, following a 4.9% decline in 2020.
