german property boosted by economic growth
News Posted On: 31 August 2010
The German economy is now proving itself as Europe's largest and most powerful economies. Its second quarter growth of 3.7% year on year is not only the second biggest in the European Union, (beaten by Slovakia at 4.9%) but is also a massive margin on all its main competitors, like France (1.7%), Italy (1.1%), Spain (-0.2%), Portugal (1.4%), and the Netherlands (2.1%). Only Estonia and Sweden came close with 3.5% and 3.6% respectively.
This cannot fail to boost property investment in Germany. More than most the German property market is driven (and halted) by economic growth. This is because, with less than half of households owning their house the government is forced to control rental rates. Because most buyers in the market are those buying to let, the government's control over rents is ineffectually controlling price appreciation as well.
As a result of this, German property prices only grow when rents are growing, which only happens when the economy is growing. Because of these realities, Germany has never had a boom, but investors have been able to benefit from reliable rental demand giving moderate (but reliable) rental yields.
This reliability has become more important than ever since the crunch set in. People are no longer chasing seemingly unbelievable yield opportunities, but are focussing on rental potential. One thing German property has bags of is rental potential, and reports are already indicating increasing popularity of German property with international investors.
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