• 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
Greece crisis
Berlin's tough line splits European public opinion
Angela Merkel and Alexis Tsipras. File Photo: DPA

Berlin's tough line splits European public opinion

A study released on Tuesday shows that Germany's firm stance on Greek reforms has split European public opinion. But of all the main parties to the negotiations Berlin still fared best in the polling. READ  

Woman tries to take pony abroad in a car boot
Photo: DPA

Woman tries to take pony abroad in a car boot

A woman from Lower Saxony was stopped by police on Tuesday – for trying to carry a Shetland Pony out of the country in the boot of her Fiat Panda. READ  

Hamburg bunker blast and fire injure 38
Photo: DPA

Hamburg bunker blast and fire injure 38

UPDATE: A fire and explosion in a World War II-era bunker injured at least 38 people in Hamburg on Tuesday morning. READ  

Local list
Germany's top refreshing summer drinks
Photo: DPA

Germany's top refreshing summer drinks

Just like countries all over Europe, there's no shortage of multinational cola and other global thirst quenchers to be had in German shops. But what do you sip when you want a little local flavour? Read on to find out... READ  

Forest tragedy as best man kills groom-to-be
File photo: DPA

Forest tragedy as best man kills groom-to-be

A family outing turned into tragedy on Monday, when a best man in Thuringia accidentally killed the groom-to-be just days before his wedding. READ  

Slash CO2 emissions to save oceans: scientists
A humpback whale breaching. Photo: Wwelles14/Wikimedia Commons

Slash CO2 emissions to save oceans: scientists

German scientists said on Monday that carbon dioxide (CO2) emissions must begin falling immediately if mankind is to have any hope of preserving Earth's oceans as we know them today. READ  

Weekend heatwave to follow Tuesday showers
Sun shining through an apple tree in Düsseldorf. Photo: DPA

Weekend heatwave to follow Tuesday showers

Germany can expect a cooler Tuesday with heavy showers in the west of the country before returning to high summer conditions over the weekend, the German Weather service said. READ  

Merkel's office hunted journalists' sources
Photo: DPA

Merkel's office hunted journalists' sources

The scandal around an investigation into journalists reporting on classified information deepened on Tuesday as new information showed that officials from the Chancellery and the Interior Ministry tried to uncover reporters' sources. READ  

'Hot Boy from Germany' wins Vietnam Idol
Image: Fremantle Media/YouTube

'Hot Boy from Germany' wins Vietnam Idol

A 22-year-old from Hanover has become the latest winner of Vietnam Idol – bagging $27,000 along with his new title. READ  

Man promises to stop coffin naps in public
If you want to rest in place while you're still alive, a car park isn't the place place to choose. Photo: DPA

Man promises to stop coffin naps in public

When a man walking his dog alerted police to the fact that a black coffin was lying in the middle of a public parking place, the cops were surprised to find someone inside. READ  

RECEIVE OUR NEWSLETTER AND ALERTS
Business & Money
Start-up helps new Berliners short cut bureaucracy
National
The 1,000s of Germans massacred after the Second World War
Sport
Germany star scores own goal with PR gaffe
Features
'Women-only' parking: sensible or sexist?
Politics
Satire and reality blur in parody party's strife
National
13-year-old boy detained for trying to join Isis
Culture
Berlin restaurant serves up Greek Crisis Menu
Rhineland
Doctor on trial after woman wakes in morgue
Society
Six odd things Germans do in the summer
Sponsored Article
Outsourcing drives Apreel's Europe growth
Society
Police bust kinky Bavarian couple over painful love-making
Politics
Merkel brings Palestinian girl to tears
Hamburg
Amateur archaeologist finds Nazi gold hoard
National
Could Merkel learn a lesson in love from this doppelganger?
Travel
Why you should stay in Germany for the summer holidays
Sport
German press tell Schweinsteiger 'good riddance'
National
Hamburg gets a bouncing 100kg baby girl
Society
In North Germany, money sometimes DOES grow on trees
National
Hero mechanics stop Bavaria shooting spree
International
Denmark says that border controls are coming
National
Did hackers take control of German missile battery?
Politics
Munich gives gay pride green light
Business & Money
Berlin rent controls hit prices hard
National
Fighting to breastfeed in public without shame
Society
Ice cream for dogs 'gobbled up in one gulp'
Education
Are hotpants a feminist issue?
Rhineland
Lion cub reunited with mother
National
How the heatwave is cracking Germany's Autobahns
International
Why the French are more sympathetic to Greece than the Germans
Sponsored Article
Crans-Montana: International expat hub
Gallery
Police seize pensioner's WW2 heavy weapons haul
National
How to survive the Europe-wide heatwave
Sport
Is Schweini already out of the door at Bayern?
Politics
How German media shaped the Greece crisis
National
Car assembly robot crushes worker at Volkswagen
Rhineland
Weathermen red-faced over heatwave snow warning
Society
An eye for an eye? Mum protects child in playground with pepperspray
National
As it happened: Queen Elizabeth's final day in Germany
National
As it happened: Queen Elizabeth's second day in Germany
National
Queen Elizabeth II's first day in Germany - as it happened
National
Bus passengers tell fake racists where to get off
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

7,099
jobs available
Toytown Germany
Germany's English-speaking crowd