CHAPTER SIXTEEN: Property Investing in Germany

Germany isn’t a market often mentioned in property magazines or on television programmes. Neither is it the kind of property market that makes people jump up and down with excitement. In contrast to the rest of Europe house prices have actually fallen over the last decade. Purchase fees and taxes are expensive and the Germans have one of the lowest recorded rates of home ownership. Only 43% of Germans own their own home, a level which falls to 11% in the capital, Berlin. This is compared to 70% in the UK and US.

Yet something is stirring in the property markets of Germany. Big institutional investors are spending enormous amounts of money on residential acquisitions. Writers for dry finance journals are looking interested. 3% of knowledgeable Irish investors are now choosing Germany as their target market.

Somewhat paradoxically, the appeal lies in the property market’s sheer lack of fizz. The low sales price makes this one of the most affordable markets in Europe, while the German preference for renting creates reliable rental income of up to 10%. Germany may not be the place to look for capital appreciation, but a good quality house here should make a reliable return year in, year out.

Is This a Good Place to Buy?

Germany is both Europe’s largest economy and the largest residential market, yet according to the Organisation of Economic Co-operation and Development, property prices here fell 6.8% between 1994 and 2004. In the same period house prices quadrupled in Ireland and doubled…