German house price indices

[trybefore 6]

Thinking of buying/building a house here in Germany as prices seem to be dropping. But where can I find details of the national/local house price index to make sure that I really understand where its going? Also does it make sense to build or buy at the moment and if there is a 'best' answer, why? Thanks.

[Darkknight 2,305]

What your asking all depends on the location your going to build/buy in.. In some places the prices are falling

in other the prices are going up..

[Conquistador 11,153]

Try destatis.de or one of the German economic research institutes. The OECD has a housing price index for a number of countries as well, but it will almost certainly be nationwide data. DK makes a great point above- real estate markets are local.

[thefirelane 981]

 

Also does it make sense to build or buy at the moment and if there is a 'best' answer, why? Thanks.

Two really important points:

1) From what I've read, economists expect the US market to hit bottom in the Spring, with Europe trailing by 6 months and hitting bottom in the fall.

2) Do not go by any advice you read on the internet.

[Cap_Scarlet 17]

 

Thinking of buying/building a house here in Germany as prices seem to be dropping. But where can I find details of the national/local house price index to make sure that I really understand where its going? Also does it make sense to build or buy at the moment and if there is a 'best' answer, why? Thanks.

I can only give you my anecdotal evidence and maybe some points to consider.

 

House prices have been steadily falling for a number of years but it is quite regional so it really depends where you want to live. We have recently bought on the outskirts of Frankfurt and the property we bought has declined in value by about 20% over the last few three years. The biggest problem you will have however is not prices per se but a) the lack of turnover / stock of houses for sale and b)Markler (agent fees) on buying.

 

As regards a) you will be amazed by the lack of sophistication by sellers and their price expectations are often completely unrealistic. You would not believe the rubbish we have been to see. I have been watching the housing market for about a year (via. www.immobilienscout24.de) and there is very little movement. You need to be on the books of a markler (or three) to get a sniff of a good property and therein lies the rub, they will typically charge between 3% and 6% (including mwst.) for their services which, once you add in stamp duty and other fees means you are looking at a bill for over EUR 50.000 on a EUR 500 k house.

 

On the other hand building can be cheaper as typically you will avoid the markler fees on the entire deal (you will typically just pay on the land). If you decide to build you almost certainly want to go for a Massiv house (i.e. built brick by brick) rather than a fertig haus (assembled in sections at a factory and then put together on site). A fertig haus will be much quicker and cheaper to build but the resale value will be correspondingly lower. Also if you go down the build route you will need to be sure what is included e.g. in fixed price quotes, the price will typically exclude the kitchen, cellar, garage, outside landscaping, light fittings etc. etc. which as you can imagine will add up to quite a sum.

 

At the end of the day if depends how quickly you want to move and whether you can actually find a decent second hand house that you like at a reasonable price.

[swimmer 3,707]

Forget any ideas informed by the US / UK about a "property market". It's different here - over supply of property, strong tenants' rights etc. The top ends and hot spots can go up, presumably because that's the end for people with money who can afford to compete and outbid a premium. So rises in, say, the prosperous family areas of the SW where people want to live, the classic stuff (antique riverside apartments by the Rhine), nice apartments in good city centre locations. But much of the rest's just commodity.

 

I bought here but really only because I had the cash and needed to spread that across assets (which hindsight says turned out to be for the best and got my money into Eur before the slump). I went new-build in an apartment block exactly where I wanted. It was delivered fine - to spec, pretty much on time. Of course, I had architect and other reisdents etc to smooth my path, I didn't manage it myself, and the developer was a pragmatic businessman. However, the whole process took a long time and, in retrospect, that drained a lot of my energy. I was finally the "owner" 20 months after signing up. On costs don't have to be too bad - simple kitchen, lighting etc is not a big overhead. It's fab to live in exactly what you wanted, designed for you, and all new and up to date though.

 

I started looking two years ago and some of the other places I looked at are still up for sale (and one in my block is not sold yet).

[pog451 2,486]

 

House prices have been steadily falling for a number of years but it is quite regional

The DIW (Deutsches Institut für Wirtschaftsforschung) disagrees with you. A study they did in 2008 claims that house prices have been stable in Germany for 30 years. Any variation will be very regional and even then Germany certainly hasnt experoienced the boom and bust phases tehe UK and US have been having.

 

 

We have recently bought on the outskirts of Frankfurt and the property we bought has declined in value by about 20% over the last few three years.

20%???! Whos telling you that? Thats a horrifically extreme loss. Is it in a bad area (you know, location, location, location)? My 60ies Ffat that badly needs remodelling and really is in a bad area (now) has only lost about that much in the last 12 years

 

 

The biggest problem you will have however is not prices per se but a) the lack of turnover / stock of houses for sale and

This is the biggie - At the moment, around me, new developments go like hotcakes but "used" property is almost unsellable.

 

 

b)Markler (agent fees) on buying.

Thats not a problem, just the system. Dont estate agents in the UK and US take fees?

 

 

for their services which, once you add in stamp duty and other fees means you are looking at a bill for over EUR 50.000 on a EUR 500 k house.

Thats about right - A a rule of thumb you can always calculate 10% for fees in German property deals.

 

 

On the other hand building can be cheaper as typically you will avoid the markler fees on the entire deal (you will typically just pay on the land).

*If* you can find any land, *if* you can get planning permission and *if* the land doesnt cost you considerably more than the house does (and you may well pay Maklergebühren on the land).

 

andy M

[swimmer 3,707]

The EA fee is born by the seller in the UK of course. You raised another point that is almost entirely the reverse of culturally-embedded British values. People in new-builds flat in the UK seem to be derided as second class citizens. Yet that's top priority for many here, often in a city centre.

[lazybum 64]

 

Thats not a problem, just the system. Dont estate agents in the UK and US take fees?

Yes from the vendor and you can haggle the price. I paid 0.75% when I sold in the UK 3 years ago.

[Starshollow 6,070]

there used to be a good website called HVB Expertise, but they stopped their service at the end of 2008.

 

For regional real estate markets you can check more info here:

http://www.planethome.de/de/wohnen_mehr/we...e/expertise.jsp

 

for a number of cities you can get excellent bi-lingual info on market trends here:

http://www.dave-net.de/de/markets.php

 

the German magazine FOCUS published every year a guide on 77 cities in Germany with details about prices, development, chances for the future and all that. Check more here:

http://www.focus.de/immobilien/kaufen/immo..._aid_54614.html

 

IN the end you might need help from qualified brokers or financial advisors both for finding the right property and good financing. We do offer this service for investments >250K EUR

 

Cheerio

I am a professional independent insurance broker, financial adviser, and authorised advertiser. Contact me.

[Small Town Boy 6,672]

 

The DIW (Deutsches Institut für Wirtschaftsforschung) disagrees with you. A study they did in 2008 claims that house prices have been stable in Germany for 30 years.

Hmm, well this DIW report (PDF) shows that house prices in Germany have dropped by 25% since 1981. Quote: "In Deutschland und Kanada sind die realen Immobilienpreise in den vergangenen 30 Jahren fast ununterbrochen gefallen."

[LeChamois 285]

If you read house prices as nominal house prices then the two statements say more or less the same thing.

[Cap_Scarlet 17]

 

20%???! Whos telling you that? Thats a horrifically extreme loss. Is it in a bad area (you know, location, location, location)? My 60ies Ffat that badly needs remodelling and really is in a bad area (now) has only lost about that much in the last 12 years

Actually the house was previously rented out to a couple for 10 years. They wanted to buy the house so the landlord and the tennant had an independent valuation done at EUR 800k (which I have a copy of), however before the sale completed the couple split up. We paid just over EUR 600 k. The house is in a good location and is in very good condition.

[RMA 21]

pog451 is a bit out of touch. In Germany Neubau is important, in the short term (10 - 20 years) most properties lose value. This is even recognised in the tax system which allows the write down of property values for rented properties.

 

In general since the market peaked in 1994-5 most properties, apart from absolutely top areas, have lost significantly in value. The Eigentumswohnung we bought in 1994 for 290,000 DM is now worth an absolute maximum of 110,000 € (~ 215,000 DM).

 

However, this is only a problem if you approach property purchase witha typically British (also US?) attitude of buy now and sell in five (two, ten, depending on market situation) years for a profit and buy something better. If you buy something to live in (for the foreseeable future) then the theoretical loss of value is irrelevant.

[Starshollow 6,070]

in Germany the differences in regional real estate markets are huge. Munich and the area around it are pretty save bets for investments - have been for quite a while and still are. You can get property with a net yield from lease between 5-7% and with a fair chance of decent profits over a decade or so from appreciation in value.

 

it also always depends on how you compare investments. I have a number of UK clients who sold properties in the UK in the last 2-3 years and bought property in Berlin, Munich or Dresde, for example. Of course these people made a killing deal in comparison to those who stayed invested in the UK, both from difference in development of property prices and currency development.

 

Diversification is key to successfull investment in the end always...

 

Cheerio

I am a professional independent insurance broker, financial adviser, and authorised advertiser. Contact me.

[Hutcho 2,227]

I'd be interested to see an example of where you can get 5% - 7% net yield from rent in Munich. Using the link you provided above, a Neubau costs 3650 euros per square meter, so 365000 for 100sqm + 10% costs so that's 400k.

 

You can rent 100sqm for 1000 euros cold without too much trouble. So that's just 12k a year, or just 3% assuming you can rent it out 12 months in the year.

[kent_73 3]

A little biased, but warm rent I get a 8.9% yield, so I'm sure 5-7% is feasible.

[Hutcho 2,227]

In Munich?

[kent_73 3]

Yes, in Nymphenburg-Neuhausen to be exact.

[newfoundlander 150]

If your yield is over 5% in Munich or Frankfurt then you're doing pretty good. If you lost 20% in the past few years, then you're doing something wrong.

 

The property market in Germany is regional, no doubting that, and attempting to put a trend onto the whole country is never going to work. Are we going to see a "bottom" here? Without the clear downward trend (I haven't seen it), anticipating a bottom doesn't make much sense.

 

The Interest Rates dropping have a big effect on property prices, and unless I read it wrong, Trichet did not completely rule out a 0% rate policy yet. If the banks pass this along, then it's possible transaction volume will pick up at the beginning of next year if confidence also comes back (a big "if" in Germany) - these effects lag in Germany relative to US and UK because of the difference in mentality and attitude towards debt in general. I am also looking at buying/building something, with a plan to act in the fall. But that's not attempting to call a bottom, it's, apart from fitting with personal circumstances, attempting to capitalise on where I think the financing rates are going to be.

 

I think timing the german resi market is a lot more complicated that in some other countries (not that it's easy anywhere) since the market is even more fragmented and thin on volume than most anywhere else (owner occupancy is still around a stubborn 40% nationally - and less in the major cities). No index is really going to spell it out for you.

 

Buying vs Building is a personal decision. Both have pros and cons. If you are interested in the process of building and have concrete ideas of what you want, don't mind the wait, and can find land, then build. If you find a place that suits your wallet and your tastes, then buy. Otherwise, it's a compromise and there is no way to tell you what is best.

 

Cheers