The total index declined once again in April. Prices for apartments only dipped slightly, whereas the price indices for new homes and existing houses, above all, witnessed a marked decline. In light of the general uncertainty and desire for detailed information, Hypoport AG has performed assessments focusing specifically on price developments of German real estate in various locations this month.
The first quarter of 2009 saw lower occupancy rates and lower revenues at Warimpex's hotels. Group sales fell by 19% from 18.2 million to 14.7 million in the first three months of the 2009 financial year.
Assessment and forecast
The price indices for all categories declined once again in April. This general decline in prices was, however, not accompanied by a reduction in the volume of mortgage transactions nor by any marked change in private construction activity.
The volume of private real estate that changed hands in the first quarter of 2009, and especially in March, has increased significantly by year-on-year comparison according to Bundesbank. The general uncertainty among the population may have caused the current drop in price levels, but it has not brought the market to a standstill.
As the German market is extremely heterogeneous, price developments were not consistent across the country. Location plays a central role in determining the value and price stability of property in Germany. Since these influencing factors of location are not intuitively understandable, Hypoport has performed additional statistical analysis for the month of April.
The data records of the financing transactions that were actually concluded and processed on the EUROPACE platform provide an insight into regional trends. Price movements in major built-up areas and cities map the development of the total index, whereas prices have declined much more strongly in rural regions. The smaller German towns are positioned between these two and are proving to be very stable by comparison: prices in this sub-segment have demonstrated consistently better performance than the total index since 2005.
Prices in East German regions have also performed better than the total index, whereas the regions to the west and north have largely developed in line with the index. Contrary to general expectations, the performance of all categories in the south of the country has been noticeably poor. Decisions to purchase a property should therefore include a fundamental analysis of the location in the selection process.
Nobody can say for sure whether prices will continue to decline over the short term or pick up again very soon. The experience we have gained from dealings with our clients does, however, demonstrate that this aspect is generally of only secondary importance. After all, Prof. Dr. Thomas Kretschmar, Co-CEO at Hypoport AG, knows: "Germans and especially private clientsinvest with a clearly longer term horizon". The likelihood that prices will pick up again in all categories over the medium and long terms is extremely high.
The HPX indices in detail
Declining: Total index
April 2009: 286.93
March 2009: 288.99
February 2009: 291.19
The total index declined once again in April. Following a reduction of 0.71%, the index is currently recording 286.93 points, equivalent to a decrease of 1.9% compared with its level last year (April 2008: 292.6 points). Prices for apartments only dipped slightly this month, whereas existing houses and new homes, above all, pushed the index below the level witnessed this time last year for the second consecutive month.
Slightly declining: Prices for apartments ('apartments')
April 2009: 95.81
March 2009: 96.24
February 2009: 97.38
Since last month, prices for apartments have shown a moderate decline of 0.45%. At 95.81 points, the index is therefore 1.36% below the level witnessed in April last year. Since the index is flattened over three months, the enormous decline in prices that was witnessed in March has pushed the index down in April and wil