Ger­many prices ris­ing due to de­mo­graphic changes

Financial Mirror (Cyprus) - - FRONT PAGE -

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.

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