German Property has shown itself to be a steady investment vehicle. Germany has not experienced the recent Property Booms we have seen here, and as a result Germany Properties has been spared the Property Price Crash which we are now experiencing.
Most of the Western European markets are experiencing the end of their property growth cycles; however Germany is at the beginning of theirs. After the years of reconstruction following re-unification Germany is now entering a new growth period.
Comparing its yields to other European countries, Germany generates higher returns while at the same time giving justified reasons for continued growth.
| Most over-valued residential property markets* | |
|---|---|
| Spain | 55% |
| Hong Kong | 53% |
| Australia | 50% |
| France | 40% |
| Sweden | 35% |
| Ireland | 30% |
| Britain | 29% |
| The Netherlands | 21% |
| and the most undervalued | |
| Japan | 33% |
| Germany | 15% |
| * on a price/rental basis. Source: The Economist | |
One way of gauging whether property is at ‘fair value’ is by looking at the ratio of house prices to the income they produce, ie, rents. It’s like the price/earnings ratio used by stock analysts. So the latest Economist round-up of global house prices and rents has produced more ammunition for UK property bears. Despite falling some 12.5% from their peak, British house prices are still almost 30% overvalued on this basis. Indeed, houses look good value in very few countries around the world, as the table shows. As The Economist says, with the notable exception of Germany, “Europe’s housing correction seems far from over”
For information on Property Investment in Germany visit www.investmentpropertygermany.propertyindex.com
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