vdp property price index: Up by 6.3% - property prices continue to rise

Berlin, 10 February 2020

vdp property price index reaches new high

The property price index of the Association of German Pfandbrief Banks (vdp) reached its highest level to date at the end of 2019. The index for the German market as a whole, calculated on the basis of genuine transaction data, rose by 6.3 % compared with the end of 2018 to reach 163.1 points (base year 2010 = 100).

“Prices on the German property market continue to rise – and have been doing so for ten years without interruption. However, they are no longer increasing as fast as they were two or three years ago. Particularly in the top 7 cities, price momentum for residential property is slowing down in view of the high levels reached,” emphasised Jens Tolckmitt, Chief Executive of the vdp. “As long as demand exceeds supply, there will be no fundamental change in price trends.”

Overview of price trends in the fourth quarter of 2019:

Residential/commercial properties overall: +6.3 %  
Residential properties in Germany:    +6.4 %  
Residential properties in top 7 cities: +2.9 %  

Commercial properties: +6.0 %
- Office properties: +8.9 % 
- Retail properties: - 0.2 %

Lower price momentum in top 7 cities

Residential property prices across Germany rose by 6.4 % compared with the same quarter the previous year. Thus, prices rose by more than 5.5 % for the 20th consecutive quarter. The rise in prices for owner-occupied housing (+6.6 %) made an even greater contribution to current growth than that for multi-family houses (+6.2 %). New lease rentals rose by 3.8 %, though growth was even stronger in the previous six quarters.

In the top 7 cities of Berlin, Cologne, Düsseldorf, Frankfurt, Hamburg, Munich and Stuttgart, residential property prices rose at a much lower rate than in the German market as a whole. Growth was 2.9 % compared with the end of 2018, with both owner-occupied housing (+3.6 %) and multi-family houses (+2.7 %) contributing to this trend. New lease rentals rose by only 2.0 %.

“Price momentum in the seven cities was lower than at any time since the end of 2010. The trend shows that investors are clearly not prepared to buy at any price – and that’s a good sign. It means that market mechanisms are working. There is no need for state interventions such as the Berlin rent cap,” says Tolckmitt.

A mixed picture for commercial properties

In the fourth quarter of 2019, prices for commercial property across Germany rose by 6.0 % compared with the end of 2018. The growth rate was therefore roughly on a par with the previous quarter (+5.9 %). The increase was thanks to the trend in the office sector: office property prices rose by a substantial 8.9 %, while retail property prices declined by 0.2 %.

Reasons for the mixed picture on commercial properties include, on the one hand, continuing high demand for office space, triggered by a robust domestic economy and a positive labour market outlook. Vacancy rates in many office markets are now below 3.0 %, with the result that the vdp index for new lease rentals rose by 6.2 % in the fourth quarter of 2019. On the other hand, brick-and-mortar retailers face increasing competition from e-commerce traders. Against this backdrop, demand for retail space declined, a trend reflected not only in prices but also in new lease rentals, which were down by 0.9 % at the end of 2019 compared with the same quarter of the previous year.

“German commercial properties remain as attractive as ever”

“The structural change taking place in the retail sector inevitably has an impact on the trend of property prices,” commented Tolckmitt. But, looking at the German market as a whole, he concluded: “German commercial properties remain as attractive as ever. So provided no exogenous shocks occur, there is every sign that the steady upward trend will continue. But the potential for price increases is getting smaller.”

About the vdp property price index

The Association of German Pfandbrief Banks (vdp) publishes quarterly rent and price indices showing trends on German residential and commercial property markets, based on transactions that have taken place. Prepared by the analyst firm vdpResearch, the index is used by the Deutsche Bundesbank as part of its property price monitoring activities. Over 600 credit institutions operating in the German financial sector supply transaction data (purchase prices and rents actually achieved) on their real estate finance business, and it is these data that form the basis of the index.

Information on developments in the respective sub-markets as well as all index data on the individual vdp property price indices (2003 - 2019) may be found in the relevant publication and are also available as raw data at Moreover, vdpResearch provides a detailed assessment of the regional top 7 housing markets including all sub-segments (owner-occupied housing and multi-family houses) at