vdp Price Index for Owner Occupied Housing

The following figure shows the price trend for single family houses, condominiums and - as an aggregate of both property types - for owner occupied housing in Germany.

Based on 2003, the figures show an average price increase of 14.9 % for single-family houses and 18.2 % for condominiums over the period as a whole. Since midyear 2010, the series show upturn again. The price index for owner occupied housing in total increased by 15.8 % within the whole period.

vdp Price Index for Owner Occupied Housing in Germany

vdp Indices for Multi Family Houses

The second figure shows the development of rents, cap rates and capital values for multi family houses in Germany.

The vdp Capital Value Index for Multi Family Houses is composed of the index for rents in new contracts and the empirical cap rate index. Across the entire nine-year period covered by the vdp’s database, this index has followed a slightly upwards sloping path. Whereas a sideways movement was observed between 2003 and 2010, a clear increase in capital values was recorded from the second quarter of 2011 onwards. This is probably due to the fact that, given the sovereign debt crisis, domestic and German investors have increasingly focused on German multi family houses as investment properties. Accordingly, the index that tracks the empirical cap rate reflects the growing interest shown in real estate as a stable investment.

In the first quarter of 2013, the index for rents in new contracts stood at 115.2 points (base value 2003 = 100). The rise in rents is mainly attributable to the metropolitan markets, which are benefiting from demographic developments that are comparatively positive at present. 

vdp Price Indices for Multi Family Houses in Germany

vdp Price Index for Residential Properties in Germany

The vdp Price Index for Residential Properties is calculated as an aggregate of the vdp Price Index for Owner Occupied Housing and the vdp Capital Value Index for Multi Family Houses. As a result, the vdp Property Price Indices now cover the market for residential properties in its entirety.

vdp Price Indices for Residential Properties in Germany

The following figures show the development of rents, cap rates and capital values for office buildings in Germany.

The graph depicting the vdp Rent Index for Office Buildings shows stability over the past eight years. In the first quarter of 2013, the Rent Index was 4.2% higher than it was in 2003. This demonstrates that the financial market crisis and subsequent overall economic recession in Germany has had only a muted effect on office rental levels.

The vdp Capital Value Index for Office Buildings shows somewhat greater volatility than the Rent Index. This may be attributed to the greater caution exercised by investors in downward market phases and the larger risk premiums which they thus demand. Particularly during the financial market crisis, the office market was dominated by a high degree of risk aversion relative to normal market conditions. However, when measured against changes in values in other countries, these fluctuations in property values in the German office market are comparatively modest. As the improving overall economic situation in Germany has become increasingly clear, this investment risk premium has begun to revert to pre-crisis levels. This reduction in risk premiums, along with the recovery in rental levels, provides an explanation for the upward trend in capital values over the past few quarters.

vdp-Indices for Office Buildings in Germany