Germany prices rising due to demographic changes
Demographics, according to a new Postbank study, is the major driver of property prices in Germany. The study’s results were reported by Die Welt and the Frankfurter Allgemeine Zeitung (FAZ) showing how a 1% population increase pushes the prices for condominiums in the cities up by 3.5% and makes detached houses 1.9% more expensive.
The results do not, however, apply to all of the 36 cities included in the analysis. Berlin’s population is set to grow to be 4.7% larger by 2030 (Berlin’s Senate actually forecasts 9%) and prices for condominiums are predicted to add 14.49%.
In Hamburg the population is set to grow by 4.4% with prices increasing by 13.86%.
Postbank’s models suggest that Stuttgart’s population will grow by 3.19% and condominium prices will be 10.01% higher, Düsseldorf will have 2.18% more inhabitants and its condos will cost 6.74%. In contrast, Frankfurt will lose 2% of its inhabitants, resulting in prices falling by 8%. The impact on prices is not always direct, but rather the result of knockon effects:
The study anticipates that the German population will grow as the result of around one million migrants settling in the country between now and 2030, assuming that these migrants will be distributed fairly across Germany, following the established Königsteiner formula. The tendency of refugees and migrants to initially rent low-cost apartments will have a ripple effect, increasing demand in more expensive neighbourhoods and pushing rents and property prices ever higher.
Although two-thirds of the 36 cities included in the study experienced population growth over the last ten years, only 40% will record growth through to 2030. Without the projected influx of refugees, this would be the case for only one-third of Germany’s cities.