German house price slump is already over as building costs soar

GERMANY’S housing prices are rising as increased costs for building materials slow the pace of construction and help put an end to a short-lived slump.

A measure of home valuations rose in March for the second consecutive month fuelled by a tighter market for apartments and new houses, according to data released on Monday (Apr 24) by mortgage technology provider Europace. The reading for new homes hit a record last month.

Housing prices in Europe’s largest economy had started to decline last year as higher interest rates spooked buyers, but increased construction expenses have slowed the pace of new projects, tightening supply just as Germany seeks to ease a squeeze on affordable homes.

While most housing segments are rising, higher prices for concrete and other materials as well as a tight market for construction workers are holding back prices for existing homes, according to Europace’s co-chief executive officer Stefan Muenter.

“Here, the seller’s market has turned into a buyer’s market,” he said in an e-mailed statement. “One reason for the hesitant purchasing behaviour for existing properties is modernisation expenses, which can be quite high.” BLOOMBERG