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Demand for German properties persists in the third quarter of 2013

15.11.2013
vdp property indices: residential property prices up by 4.9%, office property prices by 6.9%

Prices on the German market for owner occupied residential properties increased once again in the third quarter of 2013. Between July and September 2013 the Price Index for Owner Occupied Housing went up by 3.8% compared with the corresponding quarter one year before. Again, developments were driven primarily by the market for apartments, with prices climbing 4.8% year-on-year. The upward movement in prices for single-family and semi-detached houses was less pronounced by comparison, rising by 3.4%.

The development of prices for multi-family houses is tracked by the Cap Value Index. Compared with the corresponding quarter in 2012, this index advanced by 6.1% in the third quarter of 2013. One major factor behind this increase was the growth in new rental contracts (+5.2%). By contrast, the Cap Rate Index for Multi-family Houses fell by 0.9% against the third quarter of the previous year. The vdp’s overall index for housing, which is calculated from the partial indices for rented and owner occupied residential properties, was 4.9% higher year on year.

“The continued increase in German housing prices is attributable to the persistently strong demand in flourishing metropolitan regions and major university cities. This is where rising numbers of inhabitants meet a level of construction activity that is still too low by comparison. In the meantime, medium-sized regional centers that are growing in economic strength, such as Weimar or Oldenburg, are also helping fuel the price increase,” commented vdp Chief Executive Jens Tolckmitt. “Because the level of purchase prices is already very high in top locations, investors are increasingly turning their attention to medium-sized centers. After all, initial returns there are higher,” Tolckmitt added.

On the German office property market, prices again rose even more strongly than in the housing segment. The vdp Capital Value Index for Office Buildings climbed by 6.9% compared with the third quarter one year earlier. Here, too, new rental contracts as well as cap rates contributed to this growth. “Although demand on the part of office property users remains high, new construction activity also in this segment is still low. At the same time, domestic and foreign investors continue to show interest in German office properties,” commented Tolckmitt.

Please note:

All the vdp Property Price Indices are calculated on a quarterly basis on behalf of the Association of German Pfandbrief Banks (vdp) by vdpResearch using hedonic methods, and based on the vdp’s transaction database. Data on property prices and value-influencing factors collected in connection with property purchases financed by vdp member banks have been entered into this database.

Charts for the individual vdp property price indices

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