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German rents and prices to increase and stabilize in 2013

January 03, 2013

German housingThe German housing markets will offer good opportunities for buyers and sellers in 2013, according to German real estate association IVD. Rents and home prices are forecast to rise in most cities rise due to the continued high demand for housing. 

The IVD expects the national average in 2013 to reflect price increases slightly above the inflation rate. But the rent and price growth will slow as the year progresses gradually, and stabilize, following two strong years of price and rent increases.

The IVD says Germany's housing markets are still on the right track. Particularly encouraging, they note, is the upward trend in prices and rents since 2010 that has led to increased investment in housing. According to the Federal Statistical Office, 178,100 units were approved between January to September 2012, a 6.2% increase over the same period in 2011. This is the third consecutive year of residential building permits increases and the same is anticipated for 2013.

The current shortfalls in housing in major cities and university towns, however, remain a challenge. The supply constraints in these cities cannot quickly be overcome, in spite of the increase in new construction. Therefore, the IVD predicts that rents will rise in 2013, especially in the highly popular neighborhoods of cities whose population is growing. The increase in rent levels or the prospect of rental growth is the key incentive for investment in housing.

ICREA

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