When double-income, no-kids couples can’t afford a mortgage, and high school graduates have to look for colleges based on available living space, there’s something very amiss with the German real estate market. Yet that’s reality in many German cities, where housing prices have kept rising over the past year. With more and more Germans flocking to the country’s biggest cities, affordable housing is increasingly hard to find. But for prospective buyers and renters, there’s light at the end of the tunnel: Prices could soon level off.
That’s according to real-estate analysis firm VDP Research, which in an exclusive study for Handelsblatt, tracked the costs over time of buying or renting a home. It comes on the heels of another respected report saying a German housing-price bubble was unlikely.
In the study, VDP’s analysts evaluated real purchase prices in 16 German cities for owner-occupied apartments and one-family homes, as well as monthly rents. And they identified the most popular neighborhoods in each city, which they defined as areas where average housing prices rose most quickly over a four-year period.
The statisticians found that while housing prices in Germany continued to surge over the past year – especially in big cities like Berlin, Munich and Hanover – a reversal of that trend is in sight. In Berlin and Munich, inflation in these housing prices was in double digits compared with a year ago. In Hanover, the price of an owner-occupied apartment jumped 7 percent on the year. But even in these popular cities, VDP’s research suggests the price increases would soon begin to slow, or even stop.