For years, real estate in Germany has been considered a safe haven by many investors. This popularity will continue for some time to come. Due to the solid structure of the labour market, the introduction of the minimum wage, rising consumer confidence and increasing immigration, German homes are expected to continue rising in value this year as well as in 2015.
German housing market
Germany is a true rental market. More than 60% of the German housing market consists of rental properties. Most Germans don't buy their homes, they rent. Here's Why. Although population numbers are declining overall for demographic reasons, the demand for housing is increasingly growing.
Over the next few years, Germany will age sharply. At the same time, the average household size is falling, due to the ongoing individualisation of society. This means that more living space is needed. There is an increasing demand for smaller and medium-sized rental properties, or mid-range rental flats. The high demand and shortage of available rental housing is driving prices.
This decade, based on demographic trends in Germany, the number of employed and job-seekers will decrease. This is especially true for the core economic areas of western Germany. The resulting demand for labour can be met by the violently increasing influx of immigrants. This influx also affects the housing market. Vacant properties are being filled.
In parallel with the above developments, recognisable indicators suggest that current new construction activity is expected to fall far short of meeting the strong demand.
Opportunities and threats
Opportunities lie mainly in smaller cities and industrially highly developed regions such as the Ruhr. Here, too, demand for rental flats has increased. Because the market size compared to the Netherlands is larger and less transparent, it is still possible to find 'bargains' in Germany. Especially in smaller cities, this creates plenty of opportunities. However, ageing can have major consequences in certain regions. This ageing can be overcome by the increasing number of immigrants. Looking at larger cities like Munich and Berlin, the question is whether prices will hold up at this level. However, there will be no talk of a property bubble for the time being.