According to the assessment of the Hamburg Institute for Urban, Regional and Housing Studies, in the third quarter of 2019, in Germany, prices rose uncontrollably. Experts expect that the dynamics will continue in 2020. The value of German real estate has increased by almost 50% from 2008 to 2018, according to the latest data. This boom has accelerated since 2015 and spread to sparsely populated states.

Residential Housing Rates:

• According to the latest data, the cost of condominiums increased by 8.2% in the third quarter of 2019 compared to the same period of the previous year, an average of €2,030 per square meter. In Berlin, Hamburg, Munich, Cologne, Frankfurt, Stuttgart and Dusseldorf, prices rose by 9%.
• Houses cost rose 7.4% over the same period, to €2,670 per square meter. In the seven largest German cities, average rates reach €6,100 per square meter, and in the eastern federal states only €1,500.
• The gap between renting and buying housing is widening: the rates of new rental agreements increased by an average of 3.7% in the third quarter of 2019 and, according to experts, will continue to increase. Real estate prices have risen much faster over the years, as low-interest rates, favorable mortgage conditions and a strong economy have contributed to increased demand.

The new residential property construction difficulties
To date, in Germany, there is an acute shortage of housing. According to the construction industry, in 2019, here only 300,000 new apartments were built, which is less than the 375,000 units that the government was counting on. While 693,000 new housing units were approved in 2018, construction companies cannot handle the flow of orders.

Back in the 1990s, more than 600,000 apartments were built annually in Germany, and average prices practically did not rise. Over the years, the number of projects has gradually declined to the lowest level during the 2009 financial crisis. Over 30 years, housing in Berlin has risen in price by 400%.

Growth prospects
While property cycles in the past, usually, ended in recession, the German economy appears to be stable. Housing experts do not believe that a collapse in property prices is coming. In contrast, low-interest rates and oversupply in many parts of the country mean that housing remains generally affordable. While this is so, city prices may continue to skyrocket.