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German Residential Property Market Booms Not Bubbles

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Germany  Hamburg  Berlin  Stuttgart  Property Investment Germany  German Property Markets  Property Bubbles 

German Residential Property Market Booms Not Bubbles

By - Monday 30 July 2012

Germany is finally getting its property boom. Foreigners have been buying property in Germany for over 2 decades, always hoping that the boom in prices would be just around the corner. During the recent global property boom these hopes hit an understandable high point, but unfortunately we were all disappointed again when the boom failed to materialise.

But now we are getting there. According to the latest data from Savills investors purchased 6.13 billion Euros worth of residential property in the first half of this year, a 75% increase on the 3.5 billion Euros. The strong first half led Savills to predict a closing year total of 10 billion Euros.

Berlin, always the poster boy of the awaited boom is at the centre of the current flurry of activity. According to Savills 26,000 units were purchased in Berlin in the first half of the year, with 22% of the total Berlin was by far the leader, Stuttgart and Hamburg followed with 6.2% and 3.5% of total respectively.

All the demand is leading to residential property prices in Germany growing strongly. House prices grew 9.5% in the first quarter, following the growth of 5.4% in 2011. This has led to some talk about a bubble in Germany, as this growth is faster than at any point since the 1970s. However, most analysts agree that a bubble in Germany is unlikely, because most people rent their homes and so the government controls rent increases in line with wage growth, which is effectually a control on price growth because most buyers are investors.

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