The sharp rise in house prices seems to have stopped for the moment, but rents are picking up more strongly. This is the result of a study published Thursday by the Hamburg research institute F + B. Overall, residential real estate prices and rents for all municipalities across the country increased 0.7% between the first and second quarters of 2021. Compared to the same quarter of the previous year, the increase was about 3.2%.
The previous growth momentum weakened in the second quarter. According to the researchers, this is mainly due to the fact that the prices of condominiums and single-family homes have increased less than before. “For the first time in many years, the real estate segment held back the evolution of the overall index, while rents rose at an above average rate,” explained F + B Managing Director Bernd. Leutner. He didn’t want to talk about a trend reversal, but it was clear there was movement in the German housing market.
The value of apartments has almost doubled in ten years
The price of condominiums rose 1.0 percent from the first to the second quarter, while single and two-family homes rose only 0.4 percent, as the analysis shows. Compared to the same quarter of the previous year, prices increased by 4.5% and 3.6% respectively.
In the case of new rentals, on the other hand, analysts are again seeing significant increases after about two and a half years of stagnation. Rents rose 1.1% from the first to the second quarter. Compared year on year, the growth rate of asking rents was still 0.5%. “The temporary easing of the corona pandemic in the second quarter of this year has apparently led to an increase in demand for rental apartments, which has been accompanied by a 23% reduction in advertising volume.”
This gap between supply and demand has led to an unusually high rate of increase in asking rents compared to the national average. Existing rents nationwide only increased 0.4% between the first and second quarters, but 1.4% from the same quarter a year earlier. “Over the year as a whole, existing rents grew again much faster than the rents for new leases on a national average.
The price of single-family homes has increased 35.1% in five years – from the second quarter of 2016 to the second quarter of 2021. In a ten-year comparison, the plus is 63.4%. For condominiums, the values are respectively 31.6 and 77.9%. Anyone who invested in apartments as an investor was able to almost double their assets, while the return on single-family homes was lower. “However, over the past five years, private homes have seen a significant increase in price dynamics, which has likely tended to benefit real estate developers and sellers of existing properties,” Leutner said.