Annual Report 2010 - Muenchener Hypothekenbank eG

The central banks of the major industrialised nations maintained their expansive monetary policies and left their key interest rates at levels that were, and still are, historically low. Early in 2010 the ECB announced that it would recall its exceptional measures. however, the implementation took place hesitantly in the face of the sovereign debt crisis. Although not all of banks have secure access to the financial markets yet, a certain normali- sation has taken place. The uS central bank garnered worldwide criticism for continuing its lax monetary policy and purchasing massive quantities of uS government bonds, since many coun- tries feared that the value of their own currencies would appre- ciate vis-à-vis the dollar and give them a competitive disad- vantage. Ten-year german government bonds (Bunds) were in high demand by investors during the past year. Many investors val- ued the outstanding creditworthiness and optimal liquidity of these bonds more highly than the goal of earning high interest. As a result, the return on investment for ten-year Bunds dropped from 3.4 percent at the beginning of the year to 2.1 percent by the end of August, a contraction of more than 1 percentage point. demand for Bunds fell in response to the continuous improvement in global growth perspectives and by the end of the year they were again yielding about 3 percent. propertY anD propertY finance markets residentiaL property market – germany The german residential property market continued to be robust and retained its value, not only in comparison with the interna- tional market. Private demand for owner-occupied and rented property increased due to discussions surrounding the future of the euro, fears of rising inflation and the very low level of interest rates. for these reasons, residential property was also in high demand as a secure capital investment. As a result, in many areas prices for houses and apartments rose distinctly in the previous year. Price increases varied quite widely according to location. Particularly in metropolitan areas and prosperous regions, prices tracked rising demand, and the price differential between urban and rural areas also increased. in addition, high demand led to signs of a housing shortage in some places due to the low level of new residential con- struction in recent years, which was also reflected in rising source: statistisches bundesamt www.destatis.de, 2010 = estimated annual result residentiaL bUiLding permits in germany 1997 – 2010 figures in 000 800 700 600 500 400 300 200 100 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 291 274 349 437 476 528 297 269 240 248 182 175 178 190