The German housing-market exception | Monetary Instances


In February, a two-bedroom house in Winterhude, a northern quarter of Hamburg, had Rory and Kristina Duncan’s identify on it. The just lately married couple have been envisaging their life within the Artwork Nouveau flat, which had a south-west-facing balcony in addition to unique picket flooring, tall double doorways and ornamental plaster ceilings. Then the pandemic struck.

“We discovered what we thought was the proper house, we’d received to the
bitter finish — organized our financing, even negotiated costs on particular person gadgets of furnishings — after which instantly the vendor received chilly toes,” says Rory, who’s a transport lawyer from the UK.

After a brief “eerie silence” on property web sites throughout Germany’s lockdown, the Duncans are once more scouring the web for their very own place in Hamburg, the place they moved final 12 months. However any hopes that they had of capitalising on a flat market or different consumers’ uncertainty have been deserted. 

“If we have been hoping for a drop in costs that actually hasn’t occurred,” says Rory. “If something, corona stopped new-build homes from being completed so there’s really much less provide however nonetheless excessive demand.”

Whereas many housing markets in Europe are anticipated to face a sluggish restoration after months of lockdowns introduced gross sales to a standstill, the Duncans’ battle to discover a house is more and more widespread in German cities — the place specialists say a mixture of things imply the present cycle of excessive demand and excessive costs is prone to be comparatively unaffected by the pandemic — and could also be pushed additional.

The prosperous Winterhude space in Hamburg, one among Germany’s ‘large seven’ cities © Alamy Inventory Photograph

An extended-running downside

In Germany’s “large seven” cities — Berlin, Hamburg, Düsseldorf, Cologne, Munich, Frankfurt and Stuttgart — home costs for present properties have risen by 123.7 per cent on common from 2009 to 2019, in keeping with Deutsche Financial institution. The bottom improve was 97 per cent in Düsseldorf, whereas Munich noticed the very best leap at 178 per cent.

This far exceeds the will increase in cities similar to London and New York. In keeping with Nationwide, the common home value in London elevated 66 per cent over the identical interval; in Manhattan, it rose by about 30 per cent, in keeping with Douglas Elliman.

The Wall Museum, in Berlin, where the population has increased but the supply of housing has not; 85 per cent of Berliners rent their homes
The Wall Museum, in Berlin, the place the inhabitants has elevated however the provide of housing has not; 85 per cent of Berliners hire their properties © New York Instances/Redux/eyevine

In the meantime, what Deutsche Financial institution calls Germany’s “nationwide imbalance of provide and demand” is unlikely to be alleviated by the creation of recent properties — the German authorities isn’t on observe to satisfy its goal of constructing 1.5m new models by the tip of 2021. As a substitute, the financial institution predicts that costs will proceed to rise at the same price till a minimum of 2022.

“Modifications are coming due to the corona scenario, however I don’t see that within the housing market,” Jochen Moebert, analyst at Deutsche Financial institution, says. “The scenario is just about the identical in contrast with three months in the past.”

Price growth in German cities

Nowhere is that this felt extra strongly than in Berlin, the place home and worldwide immigration has induced the inhabitants to rise from 3.4m to three.7m in 10 years, however the variety of new housing models has not saved up with demand. “If there’s an accessible house in Berlin you’ve 45 to 50 those who wish to have it,” Moebert says.

In 2013, the common value of a house in Berlin was valued at €2,526 per sq m, in keeping with Engel & Völkers; now it’s practically €4,634. Within the capital’s premium Charlottenburg district, overlooking the rooftops of the Rococo Previous Palace and avenues of boutique retailers, a seven-bedroom house with a roof terrace is on sale via Engel & Völkers for €5.2m.

The stress on housing in Berlin — the place 85 per cent of residents hire somewhat than personal their properties — has led the Berlin authorities to introduce hire caps, freezing tenants’ payments for 5 years from 2019.

However Moebert warns this is not going to remedy the issue. “The stress on hire and costs has not gone away, it’ll simply present up differently — within the high quality of housing, for instance.”

A seven-bedroom apartment with roof terrace, Charlottenburg, Berlin, €5.2m through Engel & Völkers
A seven-bedroom house with roof terrace, Charlottenburg, Berlin, €5.2m via Engel & Völkers

Germany’s growing enchantment

In contrast with different international locations in Europe, Germany has coped with the coronavirus pandemic higher than most: authorities mentioned that the disaster was below management lower than six weeks after the nation’s first demise.

As of this week, Germany had recorded greater than 9,100 Covid-related deaths out of its inhabitants of about 83m folks; within the UK there have been greater than 45,400 deaths out of about 67m folks.

For a lot of, each inside and out of doors Germany, the pandemic has highlighted the nation’s enchantment: low unemployment, a beneficiant and accessible healthcare system, efficient political management and a secure society.

“If something the pandemic has simply confirmed the truth that I need to keep in Hamburg,” says Rory, who’s initially from London. “I hearken to [BBC] Radio Four daily and browse the British papers . . . All the pieces is a little more ordered right here. You hear what’s occurring within the UK and also you do assume, ‘How has this turn into so tough?’”

Chart comparing Germany’s prime city areas

Kai Enders, a board member at Engel & Völkers, says that Germany’s dealing with of the pandemic means it’s prone to see an inflow of immigrants and buyers trying to purchase, because it did within the wake of the 2008 monetary disaster.

“Once more, it’s apparent that Germany is getting via this much better than different international locations, so there can be some motion of individuals from them,” he says.

In Hamburg’s Winterhude, the place the Duncans hoped to maneuver, a four-bedroom house constructed within the 1910s with a stucco entrance and rooftop extension with unique picket beams is on sale via Engel & Völkers for €2.65m.

An outdoor terrace in Berlin earlier this month; Germany has suffered less in terms of coronavirus infections and fatalities than many other countries and is growing in appeal
An out of doors terrace in Berlin earlier this month; Germany has suffered much less by way of coronavirus infections and fatalities than many different international locations and is rising in enchantment © Getty Photographs

Moebert says the stress that Germany’s growing enchantment will placed on the housing market is prone to be compounded in Frankfurt by the “Brexit impact” of bankers fleeing the UK. Deutsche Financial institution expects Brexit to create demand for about 5,000 further properties, growing home costs within the monetary hub by €100-€500 per sq m.

In Frankfurt, a two-bedroom new-build house with floor-to-ceiling home windows is on sale via Engel & Völkers for €1.54m.

Two-bedroom flat in a Frankfurt highrise, €1.54m
Two-bedroom flat in a Frankfurt high-rise, €1.54m
Interior view
Inside view

How will tenants fare?

Traders in Germany have moved into residential property due to the shortage of returns elsewhere, says Enders. “Folks see that through the [coronavirus] disaster the inventory change crashed however costs for properties stayed the place they have been.”

In keeping with Guthmann Property, there was a modest rise in Berlin’s costs at the start of the 12 months, from a median value of €4,850 per sq m on the finish of 2019 to €4,890 in April this 12 months. However since Could, provides have resumed their regular climb, and in June have been at €5,000 per sq m.

“Principally it appears that evidently actual property is among the few markets that also provide some good returns,” says Moebert. “The pandemic’s internet impact on world wealth has been comparatively gentle, fairly opposite to the scenario that we had after the monetary disaster. What are you doing as an investor with plenty of wealth? You might be in search of alternatives.”

A beer garden in the Englischer Garten, Munich, in May
A beer backyard within the Englischer Garten, Munich, in Could © Alexander Hassenstein/Getty Photographs

Nevertheless, Moebert says that the market’s publicity to a worldwide recession and the pandemic’s impact on the German financial system is prone to be felt additional down the road. “I wouldn’t be stunned if we’ve got some overshooting, and a totally overvalued market in just a few years,” he says. “Some kind of correction is looming within the subsequent three to 10 years.”

Thomas McGrath is a member of an activist group campaigning towards company landlords pricing Berliners out of the capital. He’s involved by knowledge from ING Germany, which discovered {that a} third of 25 to 34-year-olds and 13 per cent of older age teams are having problem paying their hire due to the disaster.

“The most important hazard for us and renters usually is that the big companies are those which have the capital to maneuver in [and] take benefit if there are landlords going through insolvency,” he says.

Moebert places the proportion of those that can’t pay their hire due to the disaster at round 1 to three per cent.

Company buyers who would usually have used the chance for affordable borrowing to place their cash into workplace blocks or purchasing centres could also be extra prone to flip to the residential market, after widespread working from house and shuttered retailers have solid doubts over the way forward for industrial property.

“In comparison with different sectors, workplaces, retail, industrial actual property . . . we’re positive that rents will stay comparatively secure within the housing market,” says Matthias Pink, head of analysis at Savills Germany. If there are any offers available, he says they’ll most probably be within the luxurious sector, due to its inessential nature and world journey restrictions.

Home & House Unlocked

FT subscribers can join our weekly electronic mail e-newsletter containing guides to the worldwide property market, distinctive structure, inside design and gardens.
Join right here with one click on

Heinz Schlehuber, a property developer specializing in the Munich suburb of Grünwald that’s in style with the Bayern Munich soccer workforce, says he isn’t involved, nonetheless.

Schlehuber is at the moment constructing a 1,100 sq m California-style villa in Grünwald fabricated from concrete, glass and wooden. Dwelling within the interlinking buildings, the place the indoor areas soften into its surrounding backyard, prices €18m.

“Within the final 10 years, yearly we’ve seen an enormous leap in costs, so perhaps this 12 months it will get somewhat bit much less,” he says.

Sadly for the Duncans, “that gained’t be the case” for the center class of single household properties, Enders says. “Even when there was no worldwide immigration within the subsequent few months, even years, it wouldn’t have an effect on costs due to the present shortage.”

Comply with @FTProperty on Twitter or @ft_houseandhome on Instagram to search out out about our newest tales first.


  1. Hey there! I know this is kinda off topic nevertheless
    I’d figured I’d ask. Would you be interested in trading links or maybe guest authoring a blog post or vice-versa?
    My website addresses a lot of the same topics
    as yours and I believe we could greatly benefit from each other.
    If you are interested feel free to send me an email.
    I look forward to hearing from you! Excellent blog by the way!

  2. Fantastic goods from you, man. I’ve understand your stuff previous
    to and you’re just extremely fantastic. I really like what you have acquired here, really like what
    you are stating and the way in which you say it.
    You make it entertaining and you still care for to keep it smart.
    I can not wait to read much more from you. This is actually a tremendous website.

  3. Undeniably believe that which you said. Your favorite reason seemed to be on the net the simplest thing to be
    aware of. I say to you, I definitely get irked while people
    consider worries that they just don’t know
    about. You managed to hit the nail upon the top and defined out the whole
    thing without having side-effects , people can take a signal.
    Will probably be back to get more. Thanks

Leave a Reply to Cancel reply

Please enter your comment!
Please enter your name here