Statistical Office projections show that, even assuming net immigration of at least 200,000 people a year, the German population will decline from 82.5 million today to only 75 million by 2050. What impact will this have on the residential property market? This question is of particular significance when one considers that the lion’s share of private household assets is in property. Its value stood at some EUR 4,800bn in 2004, topping that of financial assets by 20 %.
Demography and property market
Compared with other major European and non-European countries, property prices in Germany have been very subdued over the past 15 – 20 years. The annual average return amounted to just under 5 %, 1 ½ percentage points below that on government bonds.
In Germany just under half of households own residential property, a relatively low proportion compared with other industrial countries. But given the value of assets tied up in property, there is great interest in the outlook for the property market. This Working Paper looks at the factors influencing the German residential property market in the coming decades.
Dr. Jürgen Stanowsky
Tel.: +49.69.2 63 – 1 83 45
Juergen.stanowsky@dresdner-bank.com