• 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
Germans want to keep their hands on cash
Germans still trust cash over other forms of payment. Photo: DPA

Germans want to keep their hands on cash

Confirming conservative stereotypes, Germans have come out strongly in favour of sticking to hard cash in conducting transactions, a survey published on Thursday showed. READ  

This week in history
Fassbinder: New German Film's Enfant Terrible
Rainer Fassbinder on set in 1977. Photo: DPA

Fassbinder: New German Film's Enfant Terrible

On Sunday May 31st, Rainer Weiner Fassbinder, one of the most influential German directors of all time, would have turned 70 - had it not been for his death at the age of 37 in 1982. The Local takes a look back at the life and work of the enfant terrible of New German Cinema. READ  

Cool caps reduce hair loss during chemo
Photo: DPA

Cool caps reduce hair loss during chemo

German scientists are trialling a special scalp-cooling cap which helps reduce hair loss for cancer patients going through chemotherapy. READ  

Industry: 'doped' growth boosting economy
A man assembling food processors in a Wuppertal factory. Photo: DPA

Industry: 'doped' growth boosting economy

The German Chambers of Commerce and Industry (DIHK) warned on Thursday that a fresh burst of economic confidence might be unfounded, even as they raised their growth projections for 2015. READ  

Slow-moving fighter jet blocks Autobahn traffic
A Eurofighter jet stopped up traffic on Thursday because it was so wide. Photo: DPA.

Slow-moving fighter jet blocks Autobahn traffic

A damaged Eurofighter plane being pulled by a truck along the autobahn was so wide that it blocked three lanes of traffic on its way to being repaired in Bavaria on Thursday, drawing the ire of fellow drivers. READ  

Right-wing leader suffers restaurant attack
AfD co-leader Frauke Petry. Photo: DPA

Right-wing leader suffers restaurant attack

Frauke Petry, co-leader of Alternative for Germany (AfD), was attacked by masked assailants while eating in a restaurant on Wednesday evening. READ  

Court rejects case against US drone strikes
An American MQ-9 "Reaper" unmanned drone. Photo: U.S. Air Force/Paul Ridgeway/dpa

Court rejects case against US drone strikes

A German court on Wednesday rejected a complaint by three Yemenis demanding that Berlin bar Washington from using a US base on its territory to operate deadly drones. READ  

Gay marriage: Germany still says 'No'
A gay couple in Stuttgart. Photo: DPA.

Gay marriage: Germany still says 'No'

Germany's cabinet on Wednesday approved a raft of draft measures to extend the rights of same-sex couples, but faced criticism for allowing only civil unions, not full gay marriage. READ  

Spectre of Greece haunts G7 Dresden meeting
German Finance Minister Wolfgang Schäuble welcomes his G7 colleagues to Dresden. Photo: DPA

Spectre of Greece haunts G7 Dresden meeting

Finance ministers and central bank governors of the Group of Seven wealthiest nations gathered in Dresden Thursday to discuss the global economy and tax evasion, but the Greek crisis was also high on everyone's minds. READ  

Cologne's giant bomb successfully defused
The bomb was burrowed deep in the ground. Photo: DPA

Cologne's giant bomb successfully defused

Bomb disposal teams have successfully made a 1,000-kilo explosive dropped during the Second World War safe, allowing 20,000 evacuated people to return to their homes. READ  

RECEIVE OUR NEWSLETTER AND ALERTS
Travel
Why the train strike is bad for passengers and workers
National
Meet Germany's Eurovision hope
Business & Money
Is 2015 a new moment for jobsharing?
Features
How the LGBT rights movement was born in Germany
National
Why you don't make bomb jokes at the airport
National
Why Germany needs a little less tipple
National
Who Germans and Americans trust... and don't
Politics
What the UK election means for Germany
National
Why Germany is great for mums
Features
The Germans with GI dads
Five ways Germany falls short on gay rights
Travel
Giant tortoise found riding Munich rail
National
FCK CPS? A-OK with court
Politics
Opinion: Brexit's dangers for Germany
Features
Smart kids all want to work for BMW
National
Minister shows off top Denglisch
National
Germany's 'other genocide' in Africa
National
Arms firms get a 'must do better' mark on ethics
Sport
Bayern's anticlimactic 25th Bundesliga win
Politics
A Greek learning politics in Germany
Features
The battle of the "Gates of Berlin"
National
Germany's 'very poor' lobbying record
National
Germany's favourite baby names of 2014
Politics
Merkel's 15 years at the top of German politics
Travel
Lowest of the low: how woman exploited Germanwings crash
Features
Spice up asparagus season with The Local's serving suggestions
Sport
Football and the €30,000 firework
Technology
Why scientists oppose killer robots
National
'Cannibal cop' gets 8 years
National
Which city is Germany's worst for drivers?
Technology
Electrifying 'Ostalgia'
National
Cologne Cathedral returns from space
Pupils mourn lost classmates
National
Freed after 25 years on death row
Shutterstock
Sponsored Article
10 things you didn’t know about Zagreb (and why you should go)
Is your workload 'out of control'? You're not alone...
Sponsored Article
What expat parents should ask before choosing a school
Features
Paddy's Day, Berlin style
National
Why east Germans are happy to get it on on camera
National
Uplifting thoughts to get you through the last week of winter
National
What would you do with a 250-year-old pretzel?
National
Who wants the Olympics more - Hamburg or Berlin?
Features
Just why is the German flag Schwarz, Rot, Gold?
Business & Money
Getting German workers and bosses thinking positive
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

6,693
jobs available
Toytown Germany
Germany's English-speaking crowd