Germany is a strong European market which could have a high income potential in terms of commercial investments or simply buying property, especially in such popular locations, as Berlin and Munich. However, in Germany one should not invest capital any where for a short-term. At the present day the prices are stagnant, unlike any other European property markets, and hopefully will stay stable till the end of the year. The prices for apartments reduced by 6.55 % in more than five years (according to globalpropertyguide.com), while the prices for town houses and mansions are not shown in the most favourable light.
Inspite of these negative factors, investors can reap the harvest in someof the key areas, especially when it comes to foreigners buying property. German property market was described as “dry”. The property prices decreased by 7% between 2000 and 2006 and should remain the same this year. The factors favoring this are a surplus of property, a lack of potential buyers, and a high level of unemployment. It is a known fact that Germans prefer renting over buying, although many of them will be able to buy property in the future.
Property prices in prosperous cities such as Frankfurt are higher and as the market is stable here, rent is increasing. Although the majority rent in Germany, in the end buying will be a cheaper choice. The German government is trying to encourage German nationals to buy property instead of renting it in order to use low property prices in their own interest. It means that buying property as opposed to renting could lead to the breaking of income tax according to the private pension programme known as riester-rente.
- Although the prices in East Germany are lower, Western Germany has witnessed a considerable price increase.
- It is a positive argument that the level of unemployment is decreasing.
- High percentages of mortgages with a fixed rate of interest make the private property market more stable.
- A high percentage of population rent instead of buying property, which creates a huge potential for buying with investment purposes.