German housing market

Demographic Change and Housing Demand

The Federal Institute for Research on Building, Urban Affairs and Spatial Development estimates the number of persons living in Germany to just under 80.8 million in 2025. The 11th coordinated population estimate of the Federal Office for Statistics assumes that this number will decrease to about 68.7 million persons by 2050. In this process, a regional differentiation between areas with growing and shrinking populations can be observed. Above-average population growth is concentrated above all in Bavaria and Baden-Württemberg, in regions along the Rhine river and in the Northwest of Germany, as well as in the surrounding areas of the metropolises Hamburg and Berlin.

The development of the households is instrumental for the demand for housing units. In 2005, there were 39.7 million households in Germany. For 2025, an increase to 41.6 million is predicted in this area. This growth is essentially due to the increasing number of single and two-person households, while less and less people live in multi-person households.3 In the course of the demographic development, the regionalisation of the housing markets will further increase. For example, Berlin and its direct surrounding areas still report growth.

Of the 39.6 million housing units available in Germany in 2006, 3.1 million were vacant. The structure of the vacancy rate shows clear regional differences. For example, the vacancy rate in the structurally weak areas is considerably higher than in the large metropolitan areas. The magnitude of the new construction activity has currently reached its limits of what is required to balance the lease decreases and the demographic development. The demand for new construction is estimated today at 3.4 million housing units by the year 2020.

The maintenance and modernisation of existing housing units as well as their adapting to modern housing needs, the adjustment of the real property in a manner appropriate for senior citizens, as well as the requirements for saving energy and protecting the climate continue to be the focus of the housing construction activities. Currently, investments into existing structures make up already nearly 75.0 % of the investments in housing construction and will also be the focal point of construction activity in the future.

Rent Development

In the period from 2000 to 2009, the net cold rents rose nationwide on average by 11.0 % and thus less strongly than the general rate of price increase of 16.0 %. In 2008, the average net cold rent amounted to EUR 6.07 per m2 on average.4

The rents deviate locally from the federal average. Analyses of low-priced rents show a different picture of the regional development of new and renewed leases. For example, the low-priced rents in growing regions of Western part of Germany dropped especially from 2003 to 2005. Strong business locations in the new Länder, on the other hand, reported slight increases in rents.

Formation of Residential Property

The residential property rate was at 43.2 % in 2008 (random income and consumption samples). It further increased slightly in the last years; in 1993, it was still at 39.0 %. The trend towards residential property is thus continuing in Germany. Since the reunification, a strong process to catch up has taken place above all in the former East Germany. The residential property rate also increases with the age of the main earner. It is becoming apparent in this process that the formation of residential property is strongly increasing in the age group between 30 and 40.

3 Federal Office for Architecture and Regional Development, Regional Development Forecast 2025
4 GdW, Housing Data and Trends 2009/2010

My Annual Report

Growth in the housing market in Berlin and surroundings