Prices for Owner Occupied Housing in Germany rise again slightly

Prices for single-family homes and condominiums in Germany rose again slightly in the fourth quarter of 2010. In this period the Price Index for Owner Occupied Housing published by the Association of German Pfandbrief Banks (vdp) was 0.6% above the corresponding figure in the third quarter of 2010 and now stands at 108.6 points (2003 = 100). The index had already, in the third quarter of 2010, risen by 0.8 point compared with the second quarter of the same year. In comparison with the final quarter of 2009 the index gained 1.5 percent, with prices for single-family homes increasing more strongly than for condominiums (+2.0 and +0.4 percent respectively).

For the year 2010 as a whole, both the overall index and the subindices for owner occupied single-family homes and condominiums saw a slight rise in prices (see table). This increase benefited from the unexpected positive economic development in Germany and the low interest rate level.

“Against the background of the favorable development on the labor market, we expect owner occupied dwellings to post a further moderate rise in prices,” said Jens Tolckmitt, General Manager of the vdp. “Seen as a whole, the German housing market has been free from exaggerations for many years and will continue to develop in a stable manner. One of the reasons for this is that the real estate and mortgage markets in Germany are geared towards long-term stability. One pillar of this culture of stability is the long-term fixed-rate mortgage, which has a term of many years and is the predominant mortgage loan form in Germany.”

The Price Index for Owner Occupied Housing is calculated on a quarterly basis by vdp­Research 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, which are weighted according to the 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 with properties bought with finance from vdp member banks. Today, the database has 611,000 transaction- and property-related data records from 20 credit institutions.

Futher information:

Berlin, February 15, 2011

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