Germanys property market is on the upswing in the epidemic: the bubble has risen to the highest level in the world.

category:Finance
 Germanys property market is on the upswing in the epidemic: the bubble has risen to the highest level in the world.


In an interview with first finance reporter, the managing director of BHHS Rubina real estate in Germany said that the strong domestic demand and the historically low interest rates in Germany are encouraging more people to buy houses.

Good: three factors support German house prices

According to the data of the Federal Bureau of statistics, from April to June, when the first wave of epidemic was most serious, the prices of villas (including single family and row houses) in seven major German cities (namely Berlin, Hamburg, Munich, Cologne, Frankfurt, Stuttgart and Dusseldorf) increased by 6.5% and 6.1% respectively.

According to empirica, a German consultancy, the selling price of apartments in the seven cities is close to 3000 euros per square meter, up more than 100% from the first quarter of 2012.

According to the Federal Bureau of statistics, house prices on the whole are still rising, but the growth rate has slowed down compared with the previous two years: apartment prices in the first half of 2019 increased by 7.9% year-on-year, compared with 11% in the first half of 2018.

The statistics bureau also pointed out that in fact, in the first half of this year, the growth rate of house prices in small and medium-sized cities in Germany was faster than that in large cities. In major cities with a population of more than 100000, the prices of villas and apartments in the second quarter increased by 7.3% and 8.2%, respectively. In rural areas, the growth rate of house prices was not lagging behind - in the densely populated rural areas, the prices of villas and apartments rose by 8.9% and 5.9%, respectively As a result, the prices of villas and apartments in sparsely populated rural areas have increased by 4.8% and 6.6% respectively.

The shortage of supply and demand is the main factor leading to the price rise, which is closely related to the large number of immigrants entering Germany.

According to the OECD report, in recent years, Germany has been the worlds second largest immigration country after the United States; the latest data of the United Nations Economic and Social Affairs Office also shows that the total number of immigrants admitted by Germany has exceeded 13 million, second only to the United States (about 51 million).

Due to the needs of work, cultural background and many other reasons, most immigrants are keen to live in large German cities (or surrounding areas), which makes the housing supply in these areas more scarce.

For example, according to Georg Chmiel, executive chairman of IQI outside Asia real estate technology group, the cities that immigrants or investors with Chinese background pay most attention to are the houses in Berlin, Dusseldorf and Munich.

The extremely low mortgage rate is also one of the important factors to stimulate buyers to enter the market. Mr. Hou is a middle-level employee of a Southeast Asian Bank in Frankfurt Branch, holding a number of rental student apartments. He told the first finance reporter that as early as 2012, he bought a second-hand apartment with two bedrooms and one living room in the suburbs of Frankfurt with a loan. At that time, the total purchase price was less than 150000 euro, but the mortgage loan interest rate given by the bank was much higher than that now, more than 4%; now the price of similar apartments has risen to nearly 300000 euro, but the loan interest rate is much lower, with an average of only about 1% Mr. Hou said so.

In addition, the construction volume is not enough, and the number of new housing projects is too few, which also promotes the rise of house prices. According to the estimation of the German Economic Research Institute (DIW), among the seven major cities in Germany, the construction under construction (including the approved real estate projects) can only meet about 70% of the market demand, and the construction delay caused by the epidemic may further aggravate the shortage of supply in the market.

Risk: housing bubble is the highest in the world?

Three years ago, Empirica predicted that the bubble of big city prices in Germany would break down and crash. To the great majority of people, the predicted slump did not happen.

But city can be heard without end. In the end of September, Munich ranked first in the UBS (global) citys real estate bubble index 2020, and Frankfurt ranked second for the first time, not only in Paris and London, but also in Toronto, Hongkong, Paris, Amsterdam and Zurich. Behind me.

The bubble index of UBS for Munich and Frankfurt is 2.35 and 2.26 respectively, and the index is considered to have a real estate bubble if it exceeds 1.5. Matthias holzhey, a real estate economist at UBS, said Frankfurt had been a victim of its own success over the past decade as the economy boomed and house prices doubled.

However, in terms of house prices, the prices of apartments in Munich and Frankfurts core areas are between 8000 and 10000 euros, which is still quite different from that of apartments in central London which are easily tens of thousands (pounds) per square meter (1 pound is about 1.1 Euro).

Novel coronavirus pneumonia risk also toured as a touchstone for testing whether a citys housing price is reasonable, UBS also said.

Carolin wandzik, managing director of the gewos Institute, takes a similar view, saying that the epidemic has expanded the trend of home office, which may boost demand for residential space outside the metropolitan areas, thereby affecting house prices within big cities.

However, Carsten Heinrich believes that the situation is different in each region of Germany, such as the impact of the epidemic on the Berlin real estate market is very limited. There are still many people who want to move to Berlin because of better job opportunities, closer to hospitals and supermarkets, he said. The attraction of Berlin (and its surrounding areas) continues to increase, as do rents and house prices,

Novel coronavirus pneumonia in Europe is also threatening to be attacked since September. The second wave of pneumonia has yet to receded and will have much impact.

Gewos said that the impact of the epidemic on the real estate market may have a delayed effect. If Germany has a long-term decline in labor demand due to the epidemic crisis, it will have a negative impact on wage development, which will also affect housing demand in the medium term.

Background of rigid demand: home buyers in China

Mr. Cai, the boss of a foreign trade company in Shenzhen, is one of the above-mentioned groups. He went to the United States to invest seven years ago, hoping to obtain a green card and pave the way for his children to study when they grow up. However, two years ago, he finally gave up the green card examination and approval and turned to Germany. According to Mr. Cai, he obtained a German (investment) legal person visa last year and bought a 50 square meter apartment in Frankfurt for his children to study in the future.

Heinrich told the first financial reporter that due to the travel difficulties caused by the epidemic, there are a lot less foreign investors this year, and the strength of the property market mainly benefits from the domestic market demand in Germany. So far, their company has received buyers with Chinese background. The purpose of buying houses is mainly for investment. Of course, many of them are bought for childrens living, while those who live by themselves are mainly overseas Chinese who live in Germany for a long time. On the prospect of the German real estate market, Mr. Hou said that although the epidemic has forced some apartments in his hands to be vacant, it has not affected his confidence in the future. He believes that the epidemic will eventually be over and students will come back. As a stable and long-term value preservation asset, the real estate in big German cities will not fundamentally change.

Heinrich told the first financial reporter that due to the travel difficulties caused by the epidemic, there are a lot less foreign investors this year, and the strength of the property market mainly benefits from the domestic market demand in Germany. So far, their company has received buyers with Chinese background. The purpose of buying houses is mainly for investment. Of course, many of them are bought for childrens living, while those who live by themselves are mainly overseas Chinese who live in Germany for a long time.

On the prospect of the German real estate market, Mr. Hou said that although the epidemic has forced some apartments in his hands to be vacant, it has not affected his confidence in the future. He believes that the epidemic will eventually be over and students will come back. As a stable and long-term value preservation asset, the real estate in big German cities will not fundamentally change.