• Germany's news in English
 

Germans build more homes in shadow of euro

Published: 21 Nov 2012 07:20 GMT+01:00

Driven by historically low interest rates and a fear of other investment opportunities, more Germans are opting to build homes, according to a report in the Frankfurter Allgemeine Zeitung newspaper.

The federal statistics office said on Tuesday that applications for building permits rose 6.2 percent in the first nine months of 2012, to 178,100.

Andreas Geyer, chief economist with ZDB, a federation of construction firms, told the paper that the pace of new permits has slowed somewhat in recent months, but that conditions remained favourable. "Employment is strong, income is high, and financing costs are low," he said.

He said he did not think the country was in danger of a housing bubble, because both real estate prices and rents were climbing, and there was not an inordinate increase in building loans.

Germany's Federal Bank is closely watching the housing market, the paper said, and has indicated in its current financial stability report that it would step in should prices become excessive.

Prices for new housing units in the seven largest German cities rose by nine percent in the past year, up from a five-percent increase the year before, the paper reported. The Bundesbank is assuming that this development will continue.

New housing is currently driving growth for the construction industry. The ZDB expects almost seven percent more revenue from this branch in 2012, and an increase of between four and six percent next year, according to the paper.

The Local/mbw

The Local (news@thelocal.de)

Your comments about this article

11:07 November 21, 2012 by elboertjie
With near zero interest rates for banks and very low interest rates for private folk, money is very cheap to come by and thus are using it to 'invest' in property.

The challenge will be when interest rates rise again by say 3% more, it would suppress the prices of property and people who wanted to speculate with their properties would be stuck with it due to lower asking prices.
14:15 November 21, 2012 by smart2012
elboertje, who gacve you a 0 interest to buy a house? can u please give me the bank name? I went 1 month ago, and they are asking for 3% already.

This is a bubble for speculator.. and when it will burts, normal people will suffer (actually they are already suffering as they cannot afford a rent or house price anymore)
15:13 November 21, 2012 by elboertjie
smart, it is near zero for banks. It is very low for private folk.

As you also say, this is a bubble in the making and pushing prices higher. Another bad side of very low interest rates, is that people who choose to rather save their money than to spend it, is indirectly penalised, because their money loose value and does not receive any interest on it at the bank.

Low interest rates is basically asking people to spend their money and not to save. I wonder if this is part of the reason why in Frankfurt so many banks and companies are developing new properties at the moment. The city is popping up with new construction site every few months with plans for skyscrapers and new malls.

The risk is, when interest rates rise, will it leave Frankfurt looking like Bangkok in the 90's, with lots of bankrupt and empty buildings?
20:23 November 21, 2012 by sonriete
The people are putting their money in bricks and mortar because they no longer trust the euro. This is what it has come to.
00:06 November 22, 2012 by Berlin fuer alles
Could be that what happened in Ireland will happen in Germany. Who will bail out Germany then if the rest of the Euro zone is austeritized (my new made up word). Dr. Merkyl and Mr. Hyde continues on her flight path up her own ass.
14:19 November 23, 2012 by zameenzad
Muslims do not pay interest as it is forbidden in Islam and their Islamic banking system also does not charge interest. That¦#39;s why they can afford nice house in Islamic countries.

When one reads the Islamic texts concerning interest, one is immediately taken by how stringent the warnings are against any involvement in interest. The Quran, for example, contains the following verses concerning interest:

¦quot;O you who have believed, do not consume interest, doubled and multiplied, but fear God that you may be successful. And fear the Fire, which has been prepared for the disbelievers.¦quot; (Quran 3:130-131)

¦quot;Those who consume interest cannot stand [on the Day of Resurrection] except as one stands who is being beaten by Satan into insanity. That is because they say, ?Trade is [just] like interest.¦#39; But God has permitted trade and has forbidden interest. So whoever has received an admonition from his Lord and desists may have what is past, and his affair rests with God. But whoever returns [to dealing in interest or usury]?those are the companions of the Fire; they will abide eternally therein. God destroys interest and gives increase for charities. And God does not like every sinning disbeliever.¦quot; (Quran 2:275-276)

Just as an insane person, unconstrained by ordinary reason, resorts to all kinds of immoderate acts, so does one who takes interest. He pursues his craze for money as if he were insane. He is heedless of the fact that interest cuts the very roots of human love, brotherhood and fellow-feeling, and undermines the welfare and happiness of human society, and that his enrichment is at the expense of the well-being of many other human beings. This is the state of his ¦quot;insanity¦quot; in this world: since a man will rise in the Hereafter in the same state in which he dies in the present world, he will be resurrected as a lunatic.

Secondly, the verses make it quite clear that there is a difference between legitimate business transactions and interest. The difference between them is so glaring that the verse does not bother to explain them, which is one of the stylistic aspects of the Quran. Thirdly, these verses clearly state that God ¦quot;destroys interest and gives increase for charities.¦quot; This is one of God¦#39;s ¦quot;laws¦quot; which humankind cannot necessarily discover on its own. The ultimate and full negative effects of interest on the individual, community and world as a whole in both this life and the Hereafter are known only to God. However, a glimpse of some of those negative effects, testifying to the truth of this verse, shall be given later in this paper. In fact, perhaps highlighting the meaning of this verse, the Prophet (peace and blessings of God be upon him) also said, ¦quot;Interest- even it is a large amount- in the end will result in a small amount.¦quot; Undoubtedly, in the Hereafter when the individual meets God, all that he amassed via such illegal means will be a source of his own destruction.
18:34 November 23, 2012 by jg.
The issue of a property bubble only arises if too many people are borrowing too much to build/buy properties - and there is no evidence of that in Germany. It seems more likely that people are choosing to move their savings into property as other investments offer lower returns and/or higher risks. Rental income looks quite high when compared with other investments at the moment.
13:35 November 25, 2012 by Englishted
@ zameenzad

All well and good shame there is no god to back it up.
21:08 November 25, 2012 by murka
Construction businesses do not spend time analyzing monetary policies and inflation. They keep their projects on ice until calculation turns black. This is what happened when borrowing in Germany became that incredibly cheap.
Today's headlines
Spectator killed in Nürburgring crash
A section of the Nürburgring's north circuit

Spectator killed in Nürburgring crash

A man has been killed and several others injured in an accident at Germany's Nürburgring racetrack. READ  

Alps Plane Crash
Germany to hold April service for crash victims
Photo: DPA

Germany to hold April service for crash victims

Germany will hold a national memorial ceremony and service on April 17 for victims of the Germanwings flight that crashed in the French Alps, killing all 150 aboard, regional authorities said on Saturday. READ  

Scientists aiming to redefine the kilogram
The world's roundest sphere. Photo: DPA

Scientists aiming to redefine the kilogram

The German Nation Metrology Institute (PTB) in Braunschweig has set itself the enormous task of finding a new formula for measuring a kilogram. READ  

Alps Plane Crash
Germanwings co-pilot 'hid illness' on crash day
Photo: DPA

Germanwings co-pilot 'hid illness' on crash day

Germanwings said on Friday that it had no knowledge of a doctor-signed sick note found by investigators at flight 4U9525 co-pilot Andreas Lubitz's flat. READ  

Varoufakis quells rumours of resignation
Yanis Varoufakis. Photo: DPA

Varoufakis quells rumours of resignation

Update: After German tabloid Bild reported that Germany's least-favourite Greek minister Yanis Varoufakis was considering resigning, the minister rejected the story on Twitter. READ  

Germany to expand disability rights
Photo: DPA

Germany to expand disability rights

A representative of the German Labour Ministry went before a UN Committee on Friday to discuss the government's plan for improved rights for disabled people. READ  

Alps Plane Crash
Germanwings captain's compassion goes viral
Photo: DPA

Germanwings captain's compassion goes viral

A Facebook post describing how a Germanwings pilot personally reassured his passengers of their safety on a flight on Wednesday has received over quarter of a million likes. READ  

Bundestag passes 'foreigner toll' for roads
Photo: DPA

Bundestag passes 'foreigner toll' for roads

The Bundestag (German parliament) passed a hugely controversial law on Friday which will charge foreigners for the use of German roads. READ  

Alps Plane Crash
Airlines agree two-person cockpit rule
Photo: DPA

Airlines agree two-person cockpit rule

The Federation of the German Air Travel Industry (BDL) confirmed on Friday afternoon that from now on two people must be in the cockpit at all times, in a bid to avoid a repeat of the Germanwings disaster. READ  

Germany urgently needs immigrants: study
Spanish immigrants in Germany. Photo: DPA

Germany urgently needs immigrants: study

A study by the Bertelsmann Institute found on Friday that Germany will need around half a million new immigrants every year until 2050 to maintain its work force. READ  

RECEIVE OUR NEWSLETTER AND ALERTS
Can the 'nightmare' of a pilot downing a plane be prevented?
National
LIVE: Co-pilot suspected of crashing plane
Pupils mourn lost classmates
National
Freed after 25 years on death row
National
Cologne Cathedral returns from space
Sponsored Article
What expat parents should ask before choosing a school
Features
Paddy's Day, Berlin style
Is your workload 'out of control'? You're not alone...
National
Why east Germans are happy to get it on on camera
National
What would you do with a 250-year-old pretzel?
Features
Just why is the German flag Schwarz, Rot, Gold?
Business & Money
Getting German workers and bosses thinking positive
National
Uplifting thoughts to get you through the last week of winter
National
Who wants the Olympics more - Hamburg or Berlin?
National
Last-minute drama of Germany's Eurovision 2015 entry
National
German photographer takes world's top prize
Features
Meet the woman getting Germans to drink more – and better – beer
Gallery
Get inspired for International Women's Day with German heroes
Sponsored Article
Expert US tax preparation for Americans in Germany
Green party proposes first-ever cannabis legalization plan
Gallery
In pictures: Germany's seven most livable cities
National
Singapore canes Germans for train graffiti
Politics
Surprise! Germans love feeling like they run the EU
Politics
Anger over plan to show women what men earn
Travel
Munich tram fans bicker over new bell
Features
Kafka: puzzling translators 100 years on
Business & Money
France or Germany: Which country really is the best country to work in?
Photo: Police
Rhineland
Student driver crashes tank into family garden.
Photo: DPA
Politics
There was a notable absence at the Anti-Semitism Commission
National
How Dresden bombing still divides Germany, 70 years on
Photo: DPA
Gallery
Take a cute break with this gallery of baby animals
International
What's keeping UK expats from voting?
Photo: DPA
National
Terror alert at a new high. Should you be worried?
Gallery
The best regional foods TTIP opponents want to protect
Photo: DPA
Features
All you ever needed to know about Pegida
Photo: Shutterstock
Culture
This cosplayer did not think his plan through
National
Europe in statistics - from Spain to Sweden
Gallery
Top 12 German idioms
Culture
10 top tips for partying in Germany
Photo: DPA
Technology
What does the Chancellor see as the future of the internet?
Photo: DPA
Business & Money
JobTalk: All you need to know about working in Germany
National
Share news tips with The Local Germany
Latest news from The Local in Austria

More news from Austria at thelocal.at

Latest news from The Local in Switzerland

More news from Switzerland at thelocal.ch

Latest news from The Local in Denmark

More news from Denmark at thelocal.dk

Latest news from The Local in Spain

More news from Spain at thelocal.es

Latest news from The Local in France

More news from France at thelocal.fr

Latest news from The Local in Italy

More news from Italy at thelocal.it

Latest news from The Local in Norway

More news from Norway at thelocal.no

Latest news from The Local in Sweden

More news from Sweden at thelocal.se

7,156
jobs available
Toytown Germany
Germany's English-speaking crowd