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Prices on the German property market continue to rise in the second quarter of 2013

vdp property indices: residential property prices up by 4.1%, office property prices by 5.6%

Prices on the German market for owner occupied residential properties rose once again in the second quarter of 2013. Between April and June 2013, the Price Index for Owner Occupied Housing went up by 3.3% compared with the corresponding quarter one year before. Developments were again driven primarily by the market for condominiums, with prices climbing 6% year-on-year. The upward movement in prices for single-family and semi-detached houses was considerably more moderate, rising by 2.3%.

The development of prices for multi-family houses is tracked by the vdp Cap Value Index. Compared with the corresponding quarter in 2012, this index advanced by 4.9% in the period from April to June 2013. One major factor in this increase was the growth recorded in new rental contracts (+4.6%). By contrast, the Cap Rate Index was down slightly (-0.3%). The vdp’s overall index for housing, which is calculated from the partial indices for rented and owner occupied residential properties, was 4.1% higher than in the second quarter of last year.

“Once again, the upward trend in German housing prices is attributable to the attractiveness of large towns and cities as well as of university cities,” commented vdp Chief Executive Jens Tolckmitt. “This is where growing numbers of inhabitants and households are fueling a steady demand. Moreover, Tolckmitt was gratified to note that the number of building permits is increasing, albeit from a low level. He added that a continuation of this trend could bring some relief to the housing market.

The German offices market, too, was characterized by rising prices in the second quarter of 2013. Year-on-year, the vdp Capital Value Index for Office Buildings climbed by 5.6%. Both new rental contracts and cap rates contributed to this growth. “We see sharply rising demand from domestic and foreign investors on the one hand, faced with a limited supply on the other,” said Jens Tolckmitt. He added that the persistently robust economic setting in Germany was having just as positive an impact as historically low interest rates.

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 IndicesCharts for the individual vdp Property Price Indices.pdf

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