Prices of German residential and commercial buildings have risen 5.2% since the start of the year, but still trail last year's level, according to the latest Real Estate Price Indicator produced by property investment group Estavis.
Prices of German residential and commercial buildings have risen 5.2% since the start of the year, but still trail last year's level, according to the latest Real Estate Price Indicator produced by property investment group Estavis.
The publication of the report coincided with the news that Germany - Europe's largest economy - has gone into recession. The Federal Statistics Office said on Thursday that the country's gross domestic product (GDP) contracted 0.5% in the third quarter, following a 0.4% drop in the second quarter. Two consecutive quarters of reduced GDP meets the definition of a technical recession.
Estavis said that areas outside the major conurbations in Germany saw moderate real estate price hikes of 0.8% this year. Prices in Berlin have risen by 2% since January. However, prices for residential and commercial buildings have dropped by 9.3% nationwide compared to last year. Prices declined by a more moderate 8.2% in small and medium-sized cities.
The Estavis Price Indicator is published every four months and calculates the sales price on the basis of actual rents paid for a total of 1,234 residential and commercial buildings new on the market. A survey of 236 properties revealed that real estate prices outside conurbations currently stand at 12.3 times the annual net rent. As recently as August 2007, the multiple was 13.4 times. 'We are currently witnessing a shift in trend. Prices continued to yield here through April, but since May, property prices in these regions have been picking up. In May alone, prices increased by 3.3%, compared to the month before,' said Rainer Schorr, CEO of Estavis.
In Berlin, real estate prices dropped by nearly 9% in August, compared to the same period last year. At present, the prices for residential and commercial buildings represent multiples of 15.6 times the annual net rent, as a survey of 439 properties showed. In August 2007, the multiple was 17.1 times.