The price level for German residential housing has remained so far unchanged since the onset of the coronavirus pandemic, according to German consulting group F+B, whose CEO Bernd Leutner warned it would be wrong to make premature and knee-jerk assumptions about the market’s direction during the crisis.
Although the dust has yet to settle on any new market development, the consultants’ study, carried out between March 2nd and 19th April, showed an immediate 38% fall in the number of apartments advertised to let after March 16th, the day the general lockdown took effect. This has since settled back to about a fall of 15% in Germany’s seven biggest cities.
Asking rents in the Big 7 ranged from minus 1.4% to minus 3%, and between minus0.2% and plus 2.2% across the country at large – in other words, no noticeable effect as a result of the pandemic – yet.
If anything, according to the F+B researchers, newly-signed residential leases in the first quarter rose by 0.6% for new-build year-on-year, after a year in which rents largely stagnated. For existing apartments (size 75sqm, 10-years old, standard fit-out), the rise was actually 1.2% – while consumer price inflation was 1.4%.
Rents in this period fell in only 13 of the 50 most expensive cities in Germany, in contrast to the 23 where this happened last year. Berlin was one of those cities, where average rents on new leases fell in Q1 from €9.16 per sqm per month to €8.94 per sqm (very probably as a result of the rent capping and freezing measures imposed by the Berlin Senate).
Purchase prices for apartments on 19th April were 6.1% higher nationwide than a year ago, and up 5.3% in the Big 7 cities (led by Stuttgart, Munich, Hamburg and Frankfurt). Munich is here still the clear leader with an average price of €7,240 per sqm.
The Hamburg-based F+B’s CEO Leutner concluded from the data that landlords were not yet lowering rents out of fear of a general economic downturn. “We’re not seeing either upward adjustments in rent as a result of looming shortages, nor any form of ‘discounting’ mentality in offering new housing to let.” Comparing the housing market to the stock market, which has suffered hefty falls since the start of corona, he added: “Property markets – and particularly residential – work in different ways to the stock market, where extremely short-term reactions to global and economic developments are the order of the day. Residential property markets are even today still slow-moving, with major indicative shifts taking a lot longer to show up.”
This may of course all look different in three months, when the next quarterly report appears.
Another set of data pointing to the buoyancy of the German residential market for the last twelve months – at least until March 2020 – is the latest Europace EPX index, managed by fintech group Hypoport. (REFIRE has tracked this index carefully for the last 15 years, as it is based on actual – not hoped-for – transactions values). These showed the year-on-year price rise to be a whopping 12.27%, while the rise for March alone was 1.08%.
Rises were noted in all three main segments – condominiums, new-build and existing homes – with even the traditional slight decline over the winter months failing to materialise. The highest rise was in condominiums, up 13.61%, while family homes showed more modest rises, of 8.73% y-on-y.
Stefan Kennerknecht, co-CEO of Europace, commented that a collapse in residential real estate prices due to the extensive social contact ban initiated in March and associated restrictions for buyers and sellers has not yet made itself felt in actual values.