Tuesday, October 16 08:26:31
German property prices are bucking the trend of most European countries and are rising significantly with City Centre price rises of up to 25pc. Ariane Jauss knew the Berlin property boom was getting serious when, a few months ago, she went to the courtroom auction of a repossessed flat. More than 60 prospective buyers for the 102-square-meter apartment, valued at 86,000 euros, crowded the room. By the time the sale had ended, the flat - in the formerly marginal suburb of Wedding - had been sold for more than double the estimate.
"It was unbelievable," says Jauss, a property agent in the once-divided German capital for 20 years. "Even two years ago, you would never have seen that." Berlin is at the forefront of one of the surprising consequences of the euro-zone crisis: Germany's property price boom. Long an outlier in Europe for its relatively low levels of home ownership and its sleepy housing market, Germany has caught the property bug to the extent that rises in price in some locations point to a potential bubble, according to some property professionals. Tracking price rises is difficult, but F and B, a research company, says average sale prices in Berlin are up 23 percent in the past five years.
Jones Lang LaSalle, a property consulting company, estimates that median prices in Berlin have risen even more sharply: 20 percent in the 12 months to June, and 37.5 percent since 2009. The long-running economic crisis is linked to the property boom in several ways. Low interest rates to aid recovery have tempted some Germans - who often prefer to rent until relatively settled - to take the step into home ownership. Perhaps just as importantly, the crisis has encouraged many wealthier savers to switch their assets into property from other investments, hoping for a better return or simply more security than with shares or bonds