Condominiums: 2015 with record price increase – "Exaggerated projections for new construction"

Back to news summary 13/01/2016

According to Empirica, advertised prices for condominiums in Germany have increased by 14.5% in 2015. This is the largest price hike within a single year since the turn of the century. In the final quarter, condominium prices across Germany rose by 2.4 %. Rents also climbed more steeply than in the previous year (+3.9 %), but here the increases occurred mostly during the first quarter of 2015, with the 4th quarter still showing an increase by 0.8 %. The combined effect of migration from rural areas into cities and immigration from abroad on the demand side, and unsatisfactory yields and low interest rates on the supply side delayed the "normal" progression of the housing market cycle, explains Empirica analyst Reiner Braun. "Exaggerated projections for new construction for refugees and a shift in demand toward owner-occupied housing as a result of the rent freeze could add additional fuel to the fire,” he states, adding that the market is increasingly becoming a playing field for gamblers.