Property in Germany is proving popular with Germans that seek better returns than those available when saving with German Banks. The attraction of an investment into the German property market has resulted in increases ion German real estate prices.
ItÃ¢â¬â¢s a fact that German property prices are on the up and demand continues from both local and international investors. All see Germany as a safe bet.
Andreas Dombret, from Bundesbank said
Prices for newly built homes in the largest German conurbations had risen 9 per cent in 2011 and the increase Ã¢â¬Åseemed to have continued in the first half of the yearÃ¢â¬Â,
Property prices in Germany seem to be at their highest in the cities where demands is outstripping supply. Goldman Sachs called Germany a "high flyer" and noted a sharp increase in property prices in the country after an era of notably quiet and stable prices.
Real estate prices in cities such as Berlin, Hamburg and Munich have risen between 5 to 20 percent in a year, according to property price analysis by German bank Helaba and property consultancy, Jones Lang LaSalle, respectively.
Demand for German property is not matched by a rise in house building: where 600,000 new apartments were built in Germany in 1995. The abolition of tax breaks has resulted in a small number of new builds hitting the market in fact in 2009 saw the number of new units dropped to just 160,000.
The government is clearly worried that ever increasing house prices could result in some sort of property bubble bursting. It seems that Germany is far less exposed to a bubble. Mortgages in Germany rose last year by only 1.2 per cent, below the 2001 level.
Ã¢â¬ÅFor now the potential for a reversal on the German property market is manageable,Ã¢â¬Â the Bundesbank said, though if it plans to Ã¢â¬Åwatch intensivelyÃ¢â¬Â markets in GermanyÃ¢â¬â¢s big seven cities.
Author Nick Marr