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vdp property indices: Further rise in German property market prices in the first quarter of 2014

  • Multi-family houses: + 5.8%, owner-occupied residential housing + 2.4%
  • Office properties + 5.0%, retail properties + 3.9%

Prices on the German property market rose yet again in the first quarter of 2014. Pub-lished for the first time since the index family was completed, the overall index of the Association of German Pfandbrief Banks (vdp) advanced 4.3% compared with the first quarter of 2013. Both the residential and the commercial property market played a part in this result, increasing by 4.2% and 4.5% respectively against the corresponding quarter one year earlier.

“The main underlying conditions have not changed in the last few months. In regional terms, demand remains concentrated primarily on urban centers. The demand of institutional investors seeking investment opportunities is as strong as ever, and they continue to show interest in German real estate. Although construction activity is on the increase, it is not nearly strong enough to meet the high demand that is being driven by the continuing economic upturn in Germany. On the commercial property market, too, rising prices reflect the persistently favorable economic situation,” said Jens Tolckmitt, Chief Executive of the vdp.

On the residential property market, prices for owner-occupied residential properties went up by 2.4% in the first three months of 2014 compared with the first quarter of last year. The market for condominiums accounted for most of this growth, with prices 4.1% higher than in the first quarter of 2013; over the same period, meanwhile, prices for single-family and semi-detached houses rose by 1.8%. The prices for multi-family houses were also up. The capital value index for these properties advanced by 5.8% year on year in the first quarter of 2014. This growth was mainly fueled by the sharp increase in new lease rentals, which posted a rise of 4.3%. At the same time, there was a 1.4% drop in the cap rate index for multi-family houses.

Office premises likewise recorded a considerable rise in prices. The capital value index here gained 5.0% in the first three months of 2014, year on year. In this period, new lease rentals for office space were up by 1.9%, while the cap rate index shed 2.9%. And in the market for retail properties, too, prices continued their upward trend. Capital values in this segment were 3.9% higher than in the first quarter of the previous year, with new lease rentals for retail properties rising by 1.1% and the cap rate index down by 2.6%.

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.

Attachment: Charts and tables for the individual vdp Property Price Indices (2003-2014)

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