For decades, the outlook towards the German property scene has been similar to the stereotype attached to the Country’s football team: efficient, dependable, structured… boring.
Recent years have seen a renaissance of flair and showmanship in German football, endowing it with considerably more life and excitement, and a World Cup to show for it. Now, the country’s property market looks poised to follow suit.
According to The World Property Journal news portal, Germany is now emerging as one of the most attractive real estate markets in Western Europe for foreign nationals. In particular, global property investors from Hong Kong and others within the Asian region are taking a much closer look as traditional markets such as the United Kingdom, Australia, Canada and New Zealand face prolonged uncertainties.
Recent analysis published by a property investment firm IP Global reveals that Germany is drawing the investor interest for multiple reasons, but a primary lure has been the lack any of capital gains tax on properties owned for 10 years or more.
Hamburg has witnessed house prices grow by 70% since 2009. In the global financial hub of Frankfurt, there has been there has been a sizeable growth spurt in terms of population and employment, which has contributed to average house prices increasing by approximately 40% between 2009 and 2016.
The national capital of Berlin is also witnessing an exponential growth in population, due to an increasing number of start-ups and new businesses that have migrated to the city. The city has a young population of under 35-year-olds (40%) and this is expected to put pressure on property prices in coming years.
Also, the vacancy rate for rentals in Berlin is merely 1.2%, indicating a strong demand for rental housing.
Overall, German market watchers say that the growing supply and demand imbalance is heating up the housing market. In 2016, 12,000 new homes were built, versus a demand for 20,000 and above.
Despite inventory constraints, potential global buyers are eager to hop on to the property ladder in Germany to take advantage of its historically low mortgage interest rates. The rate is typically 2.3% for a 10-year fixed rate mortgage.
The low interest rate environment has also boosted foreign investment in residential property sector.
Like Hong Kong, many eastern and south-eastern Asian property hunters have long favoured traditional markets such as the UK and Australia, but now these markets are facing a variety of problems.
UK is still in a tussle over Brexit, New Zealand is poised to tighten its foreign ownership laws, while the housing bubble in Australia is finally bursting. – P360