Houses and apartments in Germany have become significantly more expensive than initially assumed during the Corona crisis – both in cities and in the countryside.
On average, the prices for residential property in the second quarter were 6.6 percent higher than a year earlier, the Federal Statistical Office announced on Thursday. Compared to the previous quarter, the prices for apartments and one- and two-family houses rose by 2 percent.
This shows that the corona crisis has so far not harmed the property boom in this country – despite the collapsing economy, rising unemployment and short-time working at a record level. Some economists had at least expected a price dip, as the pandemic brought a historic slump to the German economy and weighed on the incomes of many people. The housing market was also frozen in lockdown: the number of housing advertisements collapsed by up to 40 percent at times.
The surcharges in the second quarter are now even higher than estimated in an initial estimate four weeks ago. At that time, the Wiesbaden statisticians assumed a plus of 5.6 percent compared to the same quarter of the previous year and a 1.4 percent increase compared to the previous quarter. At the beginning of the year, when the pandemic was not yet raging in Germany, real estate prices had grown at a similar rate as now calculated.
The opposition sees the numbers as evidence of a failed housing policy by the federal government. “Cheaper housing is hardly possible anymore, high land prices contribute to rising costs for housing construction and purchase, especially in growing regions and large cities,” complained Chris Kühn, spokesman for building and housing policy of the Greens in the Bundestag. He called for a “new and active land policy” for affordable housing. With a non-profit federal land fund, the federal government must enable municipalities to strengthen public spaces and the use of land in the interests of the common good.
According to the latest statistician calculations, from April to June inclusive, in the seven largest German cities (Berlin, Hamburg, Munich, Cologne, Frankfurt, Stuttgart and Dusseldorf), single and two-family houses were 6.5 percent and condominiums 6.1 percent more expensive than in Quarter of the previous year. The boom in the metropolises thus continued, albeit with decreasing dynamics for apartments. Here the price premiums were even higher in the previous year’s quarters. In the other large cities with more than 100,000 inhabitants, house prices rose by 7.3 percent in the second quarter, while those for condominiums rose by as much as 8.2 percent compared to the previous quarter.
Residential property also became more expensive in rural areas: houses by at least 4.8 percent, apartments by at least 5.9 percent. The demand for living space is particularly high in metropolitan areas. Because the prices there are usually higher than in rural areas, prospective buyers also switch to rural regions.
Researchers recently saw no end to the real estate boom for the current year either. A large part of the drivers remain intact despite the Corona crisis, according to a recent forecast by the Hamburg GEWOS Institute for Urban, Regional and Housing Research. “These include the high demand for housing due to the demographics, the lack of building land and properties as well as the low interest rate paired with a lack of investment alternatives in uncertain times.”
Specifically, GEWOS is forecasting another record year for the entire real estate market with sales of a good 290 billion euros – driven by the strong demand for apartments and houses. “Living is a basic need and, in particular, the demand for owner-occupied property remains high,” said GEWOS expert Sebastian Wunsch. This is proven by data on the price development from the supply market and from expert committees at real purchase prices. There are also catch-up effects in purchases after the lull in spring.
However, the economists do not rule out that the corona pandemic will affect the real estate market with a time delay – for example, if wage developments deteriorate permanently. It is also questionable whether, with the pandemic and the lockdown, changes in living requirements will become permanently established – for example for more space, more interest in owner-occupied residential property, living in the countryside or a higher priority for balconies or gardens.
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