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Prices for Owner Occupied Housing in Germany Continue to Rise Moderately

16.05.2011
Prices for owner occupied single-family homes and condominiums rose again slightly in the first quarter of 2011. In this period the Price Index for Owner Occupied Housing published by the Association of German Pfandbrief Banks (vdp) was 0.7 percentage points up on the corresponding figure for the fourth quarter of 2010 and now stands at 109.3 points (2003 = 100). The index gained 3.3 percentage points compared with the first quarter of 2010.

This upward trend in the first quarter of 2011 was driven primarily by the market for condominiums, with the vdp’s Price Index for Condominiums advancing to 109.1 points. This is equivalent to a growth rate of 1.3 % compared with the previous quarter. Measured against the corresponding quarter one year earlier, the index moved up by 3.3 %. The trend for single-family homes was more restrained. The vdp Price Index for Single-Family Homes rose by 0.3 % to currently 109.3 points. This is equivalent to an increase of 2.9 % over the first quarter of 2010.

“Economic researchers expect the economic upswing in Germany to continue. This means that the labor market situation and income prospects will improve further, and points to sustained stable demand for owner occupied residential properties,” said Jens Tolckmitt, General Manager of the vdp. The German property and mortgage credit markets are geared to the long term, Tolckmitt pointed out, adding that although price increases are somewhat more pronounced than in the years before, they remain moderate and are in line with fundamentals.

The Price Index for Owner Occupied Housing is calculated on a quarterly basis by vdp-Research GmbH, a wholly owned subsidiary of the vdp. The index comprises two hedonic price indices, for owner occupied single-family houses and for condominiums respectively; these are weighted according to the total number of single-family houses and condominiums in existence. The calculations are made using the vdp transaction database, which contains systematically compiled data on prices and value-determining factors of properties going back to 2003. This information is gathered in connection properties bought with finance provided by vdp member banks. Today, the database has over 630,000 transaction- and property-related data records made available by 21 credit institutions. 


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