Bundesbank monthly report: Housing in cities remains overpriced

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Status: 02/22/2021 2:35 p.m.

According to the Bundesbank, residential properties in cities are still significantly overpriced.  The  current monthly report speaks of “persistent price exaggerations on the German housing market”.

© www.de24.news The  corona crisis did not stop the steep rise in prices on the German residential real estate market. That emerges from the monthly report of the Bundesbank for February. “In the cities, the prices for residential property continued to rise and were still well above the level that appears to be justified by the longer-term economic and demographic factors,” write the central bank experts.

© www.de24.news The  prices are sometimes considerably too high. According to the Bundesbank, they are still between 15 percent and 30 percent above the indicated value – and this tendency even intensified during the Corona crisis: According to the central bankers, this is indicated by standard indicators. © www.de24.news The  pandemic may have increased demand for housing to some extent, the report says. According to the Bundesbank, regions outside the cities are also becoming increasingly attractive.

© www.de24.news The  prices keep rising

Overall, the prices for owner-occupied residential property rose by 7.5 percent last year in 2020, after having risen by 6.75 percent in the previous year. © www.de24.news

 The  Bundesbank relied on information from the Association of German Pfandbrief Banks (vdp). According to the EPX house price index from Hypoport AG, real estate prices even increased by eleven percent last year.

However, as in the previous year, price dynamics for residential real estate remained well below the rates for 2015 to 2018, across all segments, the authors emphasize. In the case of rents in new contracts, too, the trend towards lower rates of increase continued in the past year.

Is there an increasing interest in home ownership?

According to the experts, the corona crisis could even have permanently increased the interest in home ownership among private households. © www.de24.news The  reason are the personal restrictions to contain the pandemic: “In addition, residential real estate apparently remained an attractive form of investment in the low-interest environment, especially since the financing conditions improved again.” In 2020, the number of building permits was above average with more than 350,000 units.





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Bundesbank monthly report Housing cities remains overpriced

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