The latest Global House Price Index from Global Property Guide, released on 15 June, has revealed that Germany’s housing market continues to grow, albeit at a much slower pace, with the average price of apartments rising by 5.8% during the year to Q1 2022, following y-o-y rises of 7.7% in Q4 2021, 9.0% in Q3 2021,11.7% in Q2 2021 and 9.6% in Q1 2021.

The 5.8% figure was the lowest annual growth since Q3 2018 and on a quarterly basis, house prices increased by a meagre 0.3% in Q1 2022.

Germany’s housing market has been growing continuously in the past eight years, with house prices up by more than 70% from Q1 2014. Demand for residential property in Germany remains strong, buoyed by low interest rates, urbanisation, migration, as well as healthy household finances. But supply is not keeping up with the strong demand.

In Q1 2022, dwelling permits fell by 3.6% y-o-y, following annual growth of 3.4% in 2021 and 2.2% in 2020. Recently, the German government slashed its growth forecast for 2022 to 2.2% from its initial projection of 3.6%, as Russia’s invasion of Ukraine, the continuing Covid-19 crisis, as well as sanctions and high energy prices take a toll on output.