vdp-Index: German Property prices continue to rise / vdp adds to its family of indices

  • Prices for residential properties up by 6.9% on average for the year
  • Compared with the previous year, commercial property prices rise by 6.5%
  • vdp expands its property price index family with data on the residential property markets of Germany’s top 7 cities
  • Urban housing markets remain tense: top 7 index climbs by 13.7% compared with the previous year

Upward price pressures on the German real estate market again accelerated slightly in 2017. The property price index of the Association of German Pfandbrief Banks (vdp), which
is calculated on the basis of real transaction data, rose by 6.8% on average for the year (2016: +6.4%). Prices for residential properties were up by 6.9% (2016: +6.5%) and for commercial properties by 6.5% (2016: +5.8%).
With the results for 2017, the vdp is also publishing, for the first time, separate data on thedevelopment of prices and rents for dwellings in Germany’s seven largest cities (Hamburg, Berlin, Frankfurt, Munich, Düsseldorf, Cologne and Stuttgart) in addition to data for the
market as a whole. In this way, the vdp’s nationwide price indices for residential and commercial properties, which are made available by the Association’s real estate research subsidiary vdpResearch, are complemented by regional residential property indices for the
top 7 cities in Germany; these will likewise be published on a quarterly basis in future.

Urban housing markets remain tense

The vdp price index for residential properties shows that prices for homes in Germany’s top7 cities climbed by 13.7% in 2017 compared with the year before. This increase was almost twice that recorded as an average for Germany as a whole; it was driven mainly by the
surge in prices for multi-family houses, which were 14.2% higher than in 2016.The pick-up in construction activity shows that the market is functioning, by and large.
However, it continues to fall short in terms of meeting demand. This means that new construction can, at best, help gradually to ease upward price pressures, above all in the cities.

“At the present point in time, there is no telling how the announced housing policy measures to be included in the government coalition agreement will affect price developments on the housing markets,” said Jens Tolckmitt, Chief Executive of the Association of German Pfandbrief Banks. “Approaches designed to stimulate the supply side by creating more new construction should help ease market tensions and thus curb price increases. The key factor in Germany’s top 7 cities is the construction of multi-familyhouses and, in this context, the provision of building land for urban housing. On the other hand, measures such as a home ownership-linked child subsidy (Baukindergeld) which are designed to set demand-side incentives could potentially push prices higher.”

Office premises more expensive yet again for users and investors

In 2017 the commercial real estate market benefitted yet again from robust economic activity and rising employment figures. The corresponding price index advanced by 6.5% compared with the year before, fueled predominantly by the office property market(+8.4%). Demand for offices remained high, whereas the supply of new premises continuedto tighten due to low construction activity levels. Office rents went up by 3.2% as a result.
At the same time, office properties were once again in the focus of both domestic and international investors. This compounded the pressure on yields, and the corresponding index fell by 4.9%.

Prices went up in the retail property market, too, albeit to a far lesser extent (+2.9%). The change in consumer behaviour observable for years, now, towards a growing preference for online retailers is increasingly making itself felt in the bricks and mortar retail sector. As a result, demand for smaller premises is rising, while the lives of leases are becoming shorter. Nonetheless, 2017 also saw an uptick in rents for retail properties; the corresponding index moved up by 1.3% (2016: +0.7%). Details on how the various property market segments have developed as well as all index data on the individual vdp property price indices (2003 - 2017) may be found, along with tables and charts, in the attached publication.


Because these data are published on aquarterly basis, the reference value here is always the corresponding quarter one year earlier and not the average for the year. In addition, vdpResearch provides a detailed analysis of the regional top 7 residential property markets including all market segments, i.e. owner-occupied housing, (single-family houses and condominiums) and multi-familyhouses, on its website.