{"id":4430,"date":"2017-05-12T12:33:21","date_gmt":"2017-05-12T04:33:21","guid":{"rendered":"https:\/\/www.spacious.hk\/en\/blog\/?p=4430"},"modified":"2023-11-03T16:29:51","modified_gmt":"2023-11-03T08:29:51","slug":"germany-property-prices-on-fire-opportunities-and-risks","status":"publish","type":"post","link":"https:\/\/www.spacious.hk\/en\/blog\/germany-property-prices-on-fire-opportunities-and-risks","title":{"rendered":"Germany Property Prices On Fire – Opportunities and Risks"},"content":{"rendered":"

German property prices, that were relatively cheaper than those in other European countries in the past, have risen sharply. All the international property investors are now having an eye on the Germany\u2019s real estate market. Why? It is because they can see a lot of potential for the German property price to continue climbing up, especially those in major cities.<\/p>\n

There is an expanding population<\/strong> in major cities such as Frankfurt, Berlin and Munich. This adds to the currently existing supply-demand imbalance<\/strong>, leading to the upward pressure on property prices as well as the rental prices. Real estate prices in these cities have raised by more than 60% since 2010, according to the German central bank, the Bundesbank<\/a>.<\/p>\n

Take Berlin as an example, the city\u2019s population escalated significantly by 40,000 in 2015. As for the household number, it is predicted to increase by 74,000 from 2015 to 2020. Despite the rise in population and household numbers, new house building is still lagging behind. The supply of it is not sufficient to cater the household needs. Whereas in Munich, according to Dr Klein<\/a>, apartments\u00a0prices surged\u00a0by 10.52% to \u20ac4,821 (about HK$41,260) per square meter.\u00a0One- and two-family houses prices also increased by\u00a05.75% to \u20ac3,627 (about HK$31,049) per\u00a0square meter.<\/p>\n

\"\"<\/a>

source: global property guide<\/a><\/p><\/div>\n

\"\"<\/a>

source: global property guide<\/a><\/p><\/div>\n

As we can see from the below table, the Residential Property Price Index of Germany has increased from 104.63 in 2011 quarter one to 135.41 in 2016 quarter four, which is around one third of the original index. Though the noticeable increase in property prices reflects Germany’s solid economic growth, low unemployment and low borrowing costs<\/a>, some are worried that the German real estate market is overheating. Yet the good news is that there is no real estate bubble<\/strong> that threatens financial stability in Germany currently, according to Bundesbank’s chief banking supervisor\u00a0Andreas Dombret.<\/p>\n

However, we should all still pay attention to the potential risks.\u00a0Some early warning indicators include easing credit standards and credit volumes<\/strong>, which reflect that banks\u00a0are willing to take on more risk. Dombret also pointed out that booming real estate market together with the\u00a0low interest rates may lead to dangerous situation for\u00a0the banking sector.<\/p>\n

\"\"<\/a>

source: european central bank<\/a><\/p><\/div>\n

For more information on overseas property news and prices, please visit our website at https:\/\/www.spacious.hk\/hong-kong\/international<\/a> or follow our LinkedIn Page<\/a>.