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Germany's property boom will keep on going, experts predict

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Germany's property boom will keep on going, experts predict
Photo: DPA
16:44 CET+01:00
The state authority which studies house prices concluded in a report released on Tuesday that the property boom that has seen a dramatic rise in real estate investment over the past two years is set to continue.

The Gutachterausschuss, a state advisory body tasked with examining the real estate market, observed that buyers spent €237.5 billion on property last year, a 25 percent increase over 2014.

Anja Diers, chairwoman of the Gutachterausschuss, said that a trend reversal is "not in sight". Her working group analyzed one million purchase contracts for their research.

Property sales increased primarily in urban regions, partly due to persistently low interest rates and the fact that a housing shortage is driving up purchase and rental prices.

Approximately two thirds of all investments in real estate last year were on residential property, the report found, with the biggest price increase being found in properties bought for the owner's own use. Sales prices for second-hand one- or two-family houses increased by €145 to €1,545 per square metre in comparison with 2014.

The report also revealed stark regional differences in the housing market.

While buyers in Munich had to reckon with prices of €8,500 per square metre, in parts of the poor east German state of Saxony-Anhalt per-metre property costs were as low as €380.

But Diers said she did not believe the dramatic rise in prices showed Germany was trapped in a real estate bubble. Rising prices are only an indicator of a possible bubble, she pointed out. Other factors are increases in speculative buying and people struggling to pay off their mortgages. Diers said that neither of these were evident on the German market.

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