Real estate market: Purchase prices for flats in Berlin increased by more than 15 percent

The price increase for residential real estate continues unabated – especially in metropolitan cities. Low interest rates are driving up demand.

Real estate market: Purchase prices for flats in Berlin increased by more than 15 percent

In major German cities, prices for condominiums have risen significantly over past year. In capital city of Berlin, flats were particularly expensive, showing data from association of German Pfandbrief Banks, which magazine financial Test reported.

The prices for flats in Berlin thus increased by 15.6 per cent from end of 2016 to end of 2017. Frankfurt am Main has a rise of 12.5 percent to second place, followed by Hamburg (11.4), Stuttgart (11.3) and Cologne (10.8 percent). In nationwide cut, buyers of condos at end of 2017 would have to pay seven percent more than a year earlier. The basis of calculations are actually concluded purchase agreements, not advertisements or broker surveys.

Places where residential real estate was not or only slightly more expensive, re are only in East Germany according to data evaluated. For example, condominiums in Frankfurt (or) cost only 0.9 per cent more, in area Görlitz 1.7 or in district of Vorpommern-Greifswald 2.1 per cent.

200,000 euro for single family house in Cottbus – or two-room apartment in Cologne

However, price level of residential real estate is still extremely different from location to location. In Magdeburg and Cottbus, for example, report shows that re is a 130 square metre family house for about 200,000 euros. For same money you only get a small two-room apartment in Cologne or Düsseldorf. In Munich, amount is just for a student shack.

In addition to trend towards investing in property assets, extremely low interest rates and good situation on labour market are driving demand for real estate. At same time, number of new buildings does not keep pace with demand. The International Monetary Fund (IMF) recently warned of potential danger of a potential housing bubble. The rise in prices for real estate prices in Germany's "Most dynamic cities deserves an accurate observation," it was said in an IMF country report. The global financial crisis 2008/2009 had its starting point in US real estate market, where prices collapsed after years of boom.

A few months ago, Bundesbank had talked about price exaggerations, especially in cities. According to assessment at time, rapid rise in real estate prices in Germany has somewhat weakened in past year. "While housing in urban areas increased at a more or less undiminished pace, rise in prices in Germany was somewhat reduced," experts wrote.

Updated Date: 18 July 2018, 12:02

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