German economic boom prompts housing market growth
Released on = May 10, 2007, 11:07 am
Press Release Author = Jimwatson
Industry = Real Estate
Press Release Summary = The German property market has undergone something of a renaissance in the past couple of years, transforming itself from a relatively poor performer to a potential goldmine for investors. Germany is a huge county and has one of the biggest economies in Europe. However, prior to 1990, it was still split into two halves, east and west, as a result of the post-war division of territory between the US and the USSR.
Press Release Body = The German property market has undergone something of a renaissance in the past couple of years, transforming itself from a relatively poor performer to a potential goldmine for investors. Germany is a huge county and has one of the biggest economies in Europe. However, prior to 1990, it was still split into two halves, east and west, as a result of the post-war division of territory between the US and the USSR.
Following reunification, the affluent western half had to absorb the economic problems of the much poorer, underdeveloped eastern half, which had been subjected to communist rule. As a result, the economy of the new, unified nation of Germany had some problems, in particular high unemployment. This led to low prices and a sluggish housing market, which was unattractive to investors.
Now, however, the picture could not be more different. The German economy is enjoying a boom period that has seen unemployment drop to record levels. According to official government figures, there should be less than four million unemployed by the end of 2007 - not bad for a country with a population of over 82 million. Despite the rapid economic growth, property is still relatively cheap in Germany, particularly in relation to other European countries of similar stature, such as France or the UK.
For example, according to Jet-to-Let, a property investment magazine, large flats in \"trendy\" areas of Berlin, the German capital city, are available for around £110,000, approximately £1,500 per square metre. In comparison, a similar property in London would cost around £15,000 per square metre and require considerably more in the way of investment capital. It is interesting to note that the period between 1996 and 2004 saw property in London increase in price by 80 per cent, while in Berlin it decreased considerably.
For the buy-to-let investor, Germany offers some good opportunities to maximise returns by buying a property in the right area at a value-for-money price. A key fact to remember is that Germany does not have the same tradition of house ownership that is found in the UK and it is much more common for people to rent.
Around 60 per cent of Germans rent their homes, so there is a huge market of potential tenants and high potential for consistent occupancy. Richard Bowser, editor of property investor news, told Jet-to-Let magazine that, in his opinion, \"residential property values in the medium to long-term are likely to go only one way - up.\"
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