Soaring Prices for Homes in Germany
In an ongoing effort to combat escalating residential real estate prices, particularly in major cities across Germany, the government has introduced measures like the "housing construction turbo" to boost new construction and alleviate supply pressures. However, new housing construction remains subdued, leading to sustained rental growth and price increases.
According to the Federal Statistical Office, residential real estate prices in Germany as a whole rose by 1.4% in the first quarter of the year compared to the previous quarter. This trend continued into the second quarter, with prices increasing by 1.1%, according to an analysis by Pfandbrief banks. Among Germany's seven most populous cities, prices rose fastest in Düsseldorf (2%) and Frankfurt am Main (1.7%).
The Association of German Pfandbrief Banks (VDP), which includes more than 50 members like DZ HYP from Hamburg and Münster, uses data from real estate financing provided by over 700 credit institutions to calculate price developments. Jens Tolckmitt, the VDP's CEO, stated that prices have increased for the fifth consecutive quarter. He also emphasized that the housing shortage will continue for at least several more years, and residential real estate prices and rents are likely to continue to rise.
To address the affordability challenges faced by first-time buyers, who often lack sufficient equity, policymakers have proposed measures such as financial assistance or subsidies to help overcome equity barriers. Additionally, there have been discussions about implementing rent control or stabilization mechanisms in tight urban markets to slow rent increases, given the continued demand for rental housing.
However, specific new legislative or policy proposals to tighten price growth or directly cap rents have not been detailed in the sources. Instead, the government seems to be relying on boosting new supply and closely monitoring affordability in response to ongoing price rises.
Despite these efforts, the dynamics of residential real estate prices have increased again, due to the extremely tense situation on the housing market. The VDP has not yet released data for the second quarter of the year.
Investors in Pfandbrief banks receive additional security in addition to interest, supposed to protect them if a bank becomes insolvent. Pfandbriefe, a special type of bond that has been around in Germany for many centuries, are used by these banks to collect money from investors to finance a loan.
Tolckmitt stressed that although the new federal government's construction turbo is an important step, more impulses are needed to create new living space and alleviate the housing shortage. He urged for continued efforts to address this pressing issue and ensure a more affordable housing market for all Germans.
- The community policy introduced by the government, such as the "housing construction turbo", aims to boost new construction and alleviate supply pressures in the residential real estate market, following the continuous price increases and sustained rental growth.
- In personal-finance discussions, policymakers have proposed measures like financial assistance or subsidies to help first-time buyers with equity issues, given the escalating residential real-estate prices and the ongoing housing shortage.
- Investing in Pfandbriefe, a type of bond, can offer additional security in addition to interest for investors, as these bonds are used by Pfandbrief banks to collect money from investors to finance a loan, which may contribute to loosening the housing market and creating new living space.
