Trend: house prices up 6.78% y-o-y in 2018
Germany’s housing market remains robust, with the average price of apartments rising by 6.78% during 2018, an improvement’s from last year’s 4.45% growth. On a quarterly basis, house prices increased 1.39% in Q4 2018.
Analysis: Strong demand, low construction activity
Demand remains strong, buoyed by low interest rates, urbanization, and healthy household finances. Recently, the migration crisis and strong economic growth have added to the already strong demand in the country.
Despite this, construction activity remains weak. During the first eleven months of 2018, dwelling permits increased by a meagre 0.5% to 315,200 units compared to the same period in the prior year, after falling by 7.3% in 2017, 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 registered lacklustre growth in 2018, with real GDP growth of just 1.5%, down from 2.2% in 2017 and the weakest expansion in five years, according to Destatis. The economy is expected to expand by 1.1% this year and by another 1.7% in 2020, according to the European Commission.