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Geschäftsbericht 2012, englisch

Management report 15 rounding the potential dangers facing the property market and the stability of the financial market if prices continued to rise. The media, above all, reported on exaggerations in the prop- erty markets and a possible price bubble. However, according to the Financial Stability Review prepared by the Bundesbank, no current danger of a price bubble exists although greater vigi- lance is advised in certain regional markets. Prices did not develop uniformly across Germany as regional differences continued to widen. Purchase prices and rents stag- nated, or even fell, in numerous regions, especially in structurally weak rural regions with shrinking populations. In contrast, populations of major metropolitan areas rose. This fact, coupled with the limited volume of new residential housing that had been built in major German cities in the past, resulted in a growing shortage of available housing in recent years. This, in turn, further encouraged rising prices. The average price of property increased notably on a nation- wide basis as the Association of German Pfandbrief Banks (vdp) reported a 4 percent rise for 2012. The report showed that prices paid for condominiums rose at a faster pace of 5.8 percent com- pared to the 2.6 percent increase noted for one- and two-fam- ily houses. The annual average figure for net rents (excluding heat, utilities and services) paid did not keep up with this devel- opment as it rose by 1.2 percent on. This did, however, vary greatly by region. Construction of residential housing was increasingly influenced by strong demand. Based on projected figures, the number of building permits issued for new houses and apartments rose to about 240,000 in 2012, or 35 percent more than the low point reached in 2008. However, in absolute terms, the number of approved building permits remained at a low level when viewed on a long-term basis. Furthermore, following a long period of stagnation, the rate of home ownership rose from 43 percent to 46 percent, which is still below the European average. “The affordability of residential property improved further as interest rates fell again.” Interest rates paid for financing property declined further in the previous year. Many borrowers wanted to secure current interest rate levels for as long as possible. The Bundesbank’s Financial Stability Review stated that over 70 percent of new property loans made in 2012 had fixed interest rates for terms of over five years and about one in three loans had fixed rates for ten- year loans. Terms of 20 years and even 30 years were not rare. The lower interest rates further improved the affordability of residential property and more than compensated for the higher Source: German Federal Statistics Office, www.destatis.de, 2012 = estimated 500 400 300 200 100 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 291 274 349 297 269 240 248 182 175 178 188 228 240 Residential Building Permits in Germany 2000 – 2012Figures in 000

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