FRANKFURT (dpa-AFX) - House and apartment prices in Germany are once again rising sharply, particularly in the country's largest cities. In the third quarter, property prices increased by 3.8 percent compared to the same period last year, according to new data from the Association of German Pfandbrief Banks (VDP). Prices climbed for both condominiums and single- and multi-family homes, the report shows.
The price surge was especially pronounced in major metropolitan areas, with an average increase of 4.6 percent, reports the association, which represents Germany's leading real estate financiers, including Deutsche Bank, Commerzbank, major savings banks, and state banks. In Munich, Düsseldorf, Hamburg, and Cologne, residential property prices rose by more than five percent year-on-year.
Rents Also Climbing Sharply
Renters also find little relief amid the ongoing housing shortage: New lease rents for apartments in multi-family buildings rose by 3.7 percent nationwide and by 3.8 percent in metropolitan areas over the past year, according to the figures. The sharpest increases were seen in Düsseldorf and Frankfurt, each with gains of around five percent.
The housing shortage in metropolitan areas is likely to persist for several more years, said VDP CEO Jens Tolckmitt. "The building acceleration initiative is good and welcome, but more is needed." The federal government aims to achieve faster and simpler construction approvals through this measure.
However, success will depend greatly on whether municipalities pragmatically use the new opportunities, Tolckmitt noted. Proposals for further measures are already on the table - such as state guarantees covering up to 80 percent of real estate loans, which would enable large-scale residential construction.
The VDP has regularly published real estate data since 2010. Unlike many other analyses, its figures are based on actual transactions from over 700 banks and are thus considered reliable.
Recovery After Price Decline
The data indicate that the crisis in the real estate market is over; buyers once again have to dig deeper into their pockets. The nationwide price increase was especially significant for multi-family homes, which saw a rise of over five percent - a sign that investors are returning in greater numbers.
After years of booming prices, real estate became noticeably cheaper following the 2022 peak. The trigger was a sharp rise in interest rates, which made loans more expensive. Recently, however, it has become apparent that buyers and homebuilders have adapted to the higher rates.
