Germany construction sector soars, but central bank warns investors

22 February 2012 17:46  [Source: ICIS news]

LONDON (ICIS)--Germany’s housing and construction sector saw a 14.1% year-on-year increase in December’s order intake, the country’s statistics office said on Wednesday.

December sales in housing and construction rose by 24.6% year on year, to €9.4bn ($12.5bn), the Statistisches Bundesamt said.

For the full 12 months of 2011, housing and construction sector sales rose by 12.5% year on year to €93.4bn.

In a separate update report, the country’s central bank warned of a possible bubble in parts of the market.

The Bundesbank said that Germany’s property prices rose by a strong 5.5% in 2011 - more than double the 2.5% year-on-year increase recorded in 2010 from 2009.

In towns with populations of more than 500,000 people, prices for town houses and apartments rose 7% year on year in 2011, compared with 3.25% in 2010 from 2009.

The Bundesbank warned that with Germany’s shrinking population there would be no assurance that investors can cover rising property purchase prices through increased rents over the long run.

Investors needed to take a close look at this risk, the bank added.

As in the US and other countries, housing and construction is an important market for Germany’s chemicals and other industrial producers.

Analysts have repeatedly noted that because the eurozone sovereign debt crisis, as well as persistently low interest rates and potential inflation risks, German investors are putting more and more money into housing.

Germany’s housing pricing had been relatively subdued over the past 10 to15 years, compared with countries such as the US, the UK or Spain where prices soared, followed by a sharp correction in the wake of the 2008/2009 global economic and financial crisis.

($1 = €0.75)

By: Stefan Baumgarten
+1 713 525 2653

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