Prices for German residential and office properties in 2013

vdp property indices: residential property prices rise by 4.0 % on average for the year, office property prices by 5.9 %

German real estate is still in demand. As an average for 2013, prices for owner-occupied residential properties rose by 3.2% (2012: + 3.1%). Developments in the individual property segments were mixed in the fourth quarter of 2013. For the first time since the first quarter of 2010, the price index for owner-occupied housing fell against the previous quarter, decreasing by 0.4%. This was due to the decline in prices for single-family houses, which were down by 0.7% quarter on quarter. By contrast, prices for condominiums advanced by 0.3% in the same period.

Prices for multi-family houses rose more sharply year-on-year. Here, the capital value index climbed by 4.7% in 2013 (2012: + 4.9%). In this segment, too, growth was more pronounced in the first three quarters. According to Jens Tolckmitt, Chief Executive of the vdp, the slight dip in the final three-month period resulted from the decline in new lease rentals by 0.3%. “Investor demand for multi-family houses remains consistently high,” he commented, adding that this is illustrated by the cap rate index for multi-family houses, which shed 1%. As a result, the capital values increased by 0.7% in the fourth quarter of 2013. The vdp’s overall index for housing, which covers both owner-occupied and rented dwellings, rose by 4.0% as an average for 2013, (2012: + 3.9%), “Demand for residential properties remains strong given the favorable financing conditions and the stability of households’ income prospects. Once again, the main focus of interest is on large and university cities,” said Jens Tolckmitt.

Prices for German office properties likewise continued to advance in the fourth quarter of 2013. The capital value index was 5.9% higher compared with the corresponding period one year before. Although demand for office premises recorded a slight decline, new lease rentals continued to rise, and were 2.8% up on the final quarter of 2012. “We continue to see a subdued level of new construction activity, which has led to a further shortage of modern office premises at almost all the major office locations,” said Jens Tolckmitt. He pointed out that German and foreign investors continue to show a very keen interest in German office properties, and that in the fourth quarter of 2013 the cap rate index fell by 2.9%. The vdp’s Chief Executive said that, calculated for the year 2013 as a whole, office property prices went up by 5.9% (2012: + 6.1%). “The situation on the labor market, which was relatively good in 2013, too, is crucial to the demand of office space,” Jens Tolckmitt stated in conclusion.

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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