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Real estate prices at risk in Germany? Bundesbank

22 Feb
2017
Real Estate prices in Germany, last 10 Years

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Real estate prices increase by more than 60% for the 7 biggest cities!

The Bundesbank issued in its February report a note on the real estate prices and market in Germany and said that the real estate market is very strong and could be at risk of overvaluation. The two main positive factors behind this trend are the low mortgage rates and the strong working market conditions.

The increases in prices are the strongest in major Cities like Berlin, Dusseldorf, Frankfurt am Main, Hamburg, Cologne, Munich and Stuttgart. Prices increases for those 7 cities on the last six years are bigger than 60% while the price increase in Germany was just above 20%. Check the chart comparing, during the last 10 years, the evolution of real estate prices for the top 7 countries in Germany, the top 127 countries and the country in general.

Newbuilding strong

The construction market is very strong as well with a good growth of units expected year/year. The number of units expected to be delivered for the last year is 380.000.

The outlook for the real estate market in 2017 is buoyant.

Germany strong in Europe but not the strongest

If you check our rankings of the different real estate prices indexes of any european country with the official datafrom Eurostat. You will notice that during the last year, real estate prices increased by 6.2% in Germany.

The last available data are up to September 2016.

European House Prices Index, Ranking, last year, Sept16

As you will see on our table, five countries in Europe had a bigger increase than Germany: Ireland, Sweden, Romania, United Kingdom and Portugal all enjoying increases of more than 7%.

If you compare real estate prices on 10-year horizon, you will see that Germany is the 3rd best countries in Europe in term of real estate returns.

 

EUROPEAN HOUSE PRICE INDEX MONITOR LAST 10 YEAR

 

Source: Bundesbank report of February 2017, p55

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