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German Home Prices Quickly Narrowing Gap against France – 2014 Update


European national central banks released European household wealth reports in Spring 2013. According to that data, “median” German households were far poorer than many of their European counterparts. Based on 2012/2013 data we compared apartment prices and discovered that French prices were strongly overvalued or German ones undervalued.
We wanted to know if this is still the case in 2014 and integrated our 2012/2013 data with the one of 2014. We discovered that German home prices are quickly recovering their delay against French ones. Hence German wealth is ticking up again.

According to the surveys of European National Central Banks (NCB), Germans are one of the poorest countries in European comparison. The question is how accurate the data was and, in particular, how far it reflected recent home price developments, or if survey data was some years old.

cyprus, spain, italy, france, austria, portugal, germany, wealth europe in comparison

Source WSJ and ECB

Still in 2012, home prices were often lower in Germany than they were in other European countries. This happened despite higher German salaries and lower other living costs compared to most of their neighbours. Hence Germans often have a higher “residual income” after rent and rent equivalent. By own experience, prices in France, but also in the French-speaking Switzerland, are often far higher than in Germany or in the rest of Switzerland respectively. Life in Paris is difficult because the gap between salaries and rents/living costs is very slim. Even if the German home-ownership rate of 44% is relatively weak, rising German home prices in the years since the NCB surveys point to rising German wealth.

German real estate prices in cities are rising rapidly
German Home Prices 2009-2014

 French real estate has not Performed since 2011

Is now a good time to buy French property?

British home buyers are being tempted to purchase property in France thanks to new record low 20-year fixed rate mortgages, and favourable currency swings.

But property remains overvalued in France with some experts suggesting prices are 30pc too high, leading to questions over whether now is the right time to buy.

Falling mortgage costs

Britons with a 20pc deposit can secure a 20-year fixed rate of 3pc, according to broker French Private Finance. The cheapest rate was 3.1pc last month and 3.75pc a year ago.


Source The Telegraph, 2014

French Mortgage approvals drop by a third

They add that the fall in new mortgages approved has seen a 32% plunge since 2011.

The CBRE report states: “While banks have tightened their mortgage lending criteria and are asking for higher deposits, the main reason for the fall in mortgages is because of the slump in demand from home buyers.”

To underline the precarious state of the housing market, the construction of new homes is also heading downwards.

In the first three months of this year, only 83,900 units were started – a drop of 11.2% from last year. (source)


#Paris home prices, up 37% since 2009, sputter as Hollande’s taxes threaten boom Bloomberg , 2013

Are real estate prices too expensive in France? 


European national central banks released European household wealth reports in Spring 2013. According to that data, "median" German households were far poorer than many of their European counterparts. Based on 2012/2013 data we compared apartment prices and discovered that French prices were strongly overvalued or German ones undervalued. We wanted to know if this is still the case in 2014 and integrated our 2012/2013 data with the one of 2014. We discovered that German home prices are quickly recovering their delay against French ones. Hence German wealth is ticking up again. - Click to enlarge

Real estate price has increased quicker than nominal disposable income and the real estate price to income ratio is currently still very high almost at an historical high. This is really problematic as it means that it is very expensive to buy a house or an apartment specifically when you are a first buyer as you cannot resale a house in order to buy a new one. The market does not work well….

Real estate price is high. But as long as households can wait there will be no downward trend on average but as income is low compared to this price the price will not be able to increase rapidly. The market is probably on an inefficient equilibrium.

Comment G. Dorgan: It is very interesting that the needed price adjustment is so difficult to realize in France. In the U.S., in Denmark or the Netherlands, the needed price correction was far quicker. This missing mobility of workers considerably weakens the French economy.

Real Estate Price in 2014 against 2013

According to Eurostat real estate prices in France fell by 1.1% and in Italy by 4.8% in 2014. They are up in Northern countries that are obsessed with owning a property, but that also have a history of higher inflation rates. Those are Sweden, the UK, Ireland, Iceland and the Baltics, with rises between 5 and 10%. (Source The Telegraph)

According to the German F+B, condo prices are up 5.2% in Germany.


Detailed price comparison: Gap between Germany and France is narrowing

In the following we compare prices more in detail. Therefore we used apartment prices from the site “Meilleur Agents” in France and from F+B in Germany.  Both data sets reflect transaction prices and show price in euro per square meter.

“Meilleurs agents” was able to determine the average price per French district (“department”) including villages. This means that prices in a town belonging to this district should be a bit higher. The German data was concentrated on the 50 most expensive and the 50 cheapest ones out of a total of 504 German towns.

Flats in Paris (8294 €/m2) were twice as expensive as in Munich (4120 €) still in 2012/2013, but in 2014 the gap narrowed to 7840 versus 4800€. Under the 25 most expensive towns/districts, only 8 were in Germany as for 2012/2013 data. In 2014 already 12 out of the 25 top entries are in Germany. Based on 2012/2013 data, we counted 17 German towns under the 50 most expensive areas, the other ones are in France. In 2014, this number rose to 25

Geographic Divide between Southern Germany and East, between Paris and the rest of France

The most expensive French districts are Paris, in the Paris area and the Cote d’Azur. Moreover, prices in the areas close to Swiss Geneva, in the departments Haute-Savoie and Savoie are quickly rising. Most expensive German towns are near to Munich in Bavaria or near Stuttgart in the South Western Baden-Wurttemberg and in the Frankfurt area. Prices are cheap in Eastern Germany including some regions near Berlin. Foreign demand helped Berlin to recover quickly, from 1790 to 2100 €/m2.

The 2012/2013 data showed that the cheapest 52 towns/districts were all in Germany except the French departments of Creuse and Nievre. Some Eastern German regions show outright asset price deflation, but most have finally stabilized.

Home prices in Eastern Germany were so cheap in 2011 that Poles from the border town Szczecin (German name “Stettin”) prefered to live in the neighbouring German towns. Quick state-enforced wage adjustment between West and East Germany  that left many Eastern Germans without jobs. Emigration from East to West led to a housing oversupply in the Eastern part. On the other side, lower wages in Polish towns helped to create jobs. Biut they created a rapid home price increase, that left prices higher than many are able to afford.

The full data is contained in the following table; the reader is able order the data clicking on header names.

Flat Prices in Germany and France in 2012/2013 compared to 2014

Town/DistrictRegion2012/2013 Avg. Price €/m²
(Q1/2013 France, Q4/2012 Germany)
2014 Avg. Price €/m²
(Q4 France, Q2 Germany)
Paris (75)Paris area82947840
92 - Hauts-de-SeineParis area54545571
06 -AlpesMaritimesCote d'Azur41574159
Nice Cote d'Azur39163796
94 - Val-de-MarneParis area41043749
78 - Yvelines Paris area38023698
74 - Haute-SavoieSwiss border32083548
83 - VarCote d'Azur32453451
73 - SavoieSwiss border26513291
Konstanz South-West31403280
2A - Corse-du-Sud31773166
93 - Seine-Saint-DenisParis area34733146
FrankfurtFrankfurt area26702900
64 - Pyrénées-Atlantiques25952820
33 - Gironde27182815
69 - Rhône27402793
95 - Val-d'OiseParis area27772776
17 - Charente-Maritime30842746
2B - Haute-Corse25882723
77 - Seine-et-MarneParis area28202701
91 - EssonneParis area28302701
OberurselFrankfurt area25302620
31 - Haute-Garonne26772610
34 - Hérault27472600
13 - Bouches-du-Rhône27312577
44 - Loire-Atlantique25822573
Bad Vilbel Frankfurt area23302550
Bad HomburgFrankfurt area25002530
DarmstadtFrankfurt area23102490
Ludwigsburg South-West22702490
MainzFrankfurt area23002450
KornwestheimFrankfurt area22202420
HofheimFrankfurt area23102410
85 - Vendée26402410
05 - Hautes-Alpes24712410
40 - Landes25262393
Wiesbaden Frankfurt area22202390
35 - Ille-et-Vilaine22542365
56 - Morbihan23372317
67 - Bas-Rhin21442315
14 - Calvados26952291
Dreieich (2014: not in top 50)Bavaria22802280
EmmendingenSwiss border22702270
Kelkheim (2014: not in top 50)Frankfurt area
Ravensburg (2014: not in top 50)South-West22102210
59 - Nord23852196
38 - Isère21702193
Bamberg (2014: not in top 50)Bavaria21902190
Sindelfingen (2014: not in top 50)South-West21702170
Ettlingen (2014: not in top 50)South-West21602160
Zirndorf (2014: not in top 50)Bavaria21602160
01 - Ain19572128
60 - Oise25152090
66 - Pyrénées-Orientales21652081
37 - Indre-et-Loire21142063
62 - Pas-de-Calais22112034
30 - Gard20022011
80 - Somme22151950
04 - Alpes de Hautes-Provence19621924
84 - Vaucluse20471907
21 - Côte-d'Or20401892
28 - Eure-et-Loir21291850
32 - Gers13641830
51 - Marne20081824
22 - Côtes d'Armor17611788
76 - Seine-Maritime19491780
11 - Aude20061776
45 - Loiret19101747
63 - Puy-de-Dôme17741707
49 - Maine-et-Loire18461697
27 - Eure19011690
65 - Hautes-Pyrénées14301680
25 - Doubs16771647
50 - Manche17101639
54 - Meurthe-et-Moselle16801603
89 - Yonne15861573
57 - Moselle17641551
26 - Drôme15941531
68 - Haut-Rhin16791523
86 - Vienne16511514
41 - Loir-et-Cher15651473
29 - Finistère14501464
42 - Loire13041463
81 - Tarn14881447
46 - Lot13501412
24 - Dordogne14681398
72 - Sarthe14741382
07 - Ardèche15241369
10 - Aube14481359
09 - Ariège13881358
82 - Tarn-et-Garonne15341353
90 - Territoire-de-Belfort13461345
12 - Aveyron13671304
39 - Jura12441264
18 - Cher13821257
53 - Mayenne12781238
79 - Deux-Sèvres13421233
87 - Haute-Vienne13301231
61 - Orne11461226
15 - Cantal12891224
48 - Lozère13781220
02 - Aisne13951218
16 - Charente12491182
47 - Lot-et-Garonne12691173
43 - Haute-Loire11141154
71 - Saône-et-Loire12791143
88 - Vosges11251131
19 - Corrèze12701121
03 - Allier11131117
08 - Ardennes11601117
52 - Haute-Marne11361065
Eisenhüttenstadt (2014 not under lowest 50)East9001050
Magdeburg (2014 not under lowest 50)East9201050
SpringeHannover area9801040
HamelnHannover area10301040
70 - Haute-Saône11281032
BernauBerlin area9801030
UelzenHannover area9801030
55 - Meuse10521029
NeuruppinBerlin area10201020
Fürstenwalde (2014 not under lowest 50)Berlin area10201020
Northeim (2014 not under lowest 50)Hannover area10201020
Arnstadt (2014 not under lowest 50)East10201020
Güstrow (2014 not under lowest 50)North East10201020
Pirna (2014 not under lowest 50)East10101010
Saalfeld/Saale (2014 not under lowest 50)East10101010
36 - Indre1085999
RathenauBerlin area860980
58 - Nièvre981959
BrandenburgBerlin area1000940
23 - Creuse1012893
Schwedt/OderNorth East830780


German home prices on haus.de


F&B report on German home prices Q4 2012

F&B report on German home prices Q2 2014

France: Meilleur agents prices in France

Further references:

Some academics, like De Grauwe, did not trust the national banks’ survey data and elaborated their own statistics. De Grauwe also incorporated the wealth of companies.

European Wealth Reports: Why “Median” Italians are Far Richer than Germans


George Dorgan
George Dorgan (penname) predicted the end of the EUR/CHF peg at the CFA Society and at many occasions on SeekingAlpha.com and on this blog. Several Swiss and international financial advisors support the site. These firms aim to deliver independent advice from the often misleading mainstream of banks and asset managers. George is FinTech entrepreneur, financial author and alternative economist. He speak seven languages fluently.
See more for 7d) Real Estate

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  1. George

    Let’s see: 8000 euro/m2 in Paris, 4000 in München. What about Switzerland? 10000euro/m2 in Zürich and Zug, I don’t dare to look at Geneve. Even little town Lenzburg is more expensive than München and rather competes with Paris. So what about it?

    My two hours research found an increase of about 50% in the prices of houses from 2007. I looked at Zürich, Aargau and Zug.

    I see only two possibilities: CHF is way overvalued or are we witnessing the mother of all bubbles?

    Otherwise, good and informative article.

  2. DorganG

    The Swiss housing market is currently recovering that what Ireland, Spain, US or UK saw until 2007. With the difference that income to price ratio is still ok (see image attached). 10000 €/m2 in Zürich or Zug is still ok, because Swiss income is twice as high as in Germany or 3 times more than in France.
    I judge that the boom has still 10 years to go.
    Where else should the Swiss put the current account surplus? In slowing emerging markets or slowing dying US or Europe?

  3. Manu

    Living in France close to GE.

    Buying a home in Switzerland which you kind of never reimburse lend capital for, where your mortgage interests are tax deductible, similar to the NL (at least until 2012). Does not this taint swiss real estate prices?

    Buying a home in France where you reimburse a decent part of capital in a quicker way. Household debt to disposable income is low (I mean, 75% in 2011 maybe). Is not that way of buying healthier ?

    Isnt there a risk to see in Switzerland a similar situation than in the Netherlands, which had a similar love of “aflossingvrij” mortgages ? NL Household debt to disposable income in 2011 was 300%. Prices keep dropping since 2009.

    Sorry for the naive remark, I am not a specialist, just trying to cross the differents charts I see on diverse sources

  4. DorganG

    True that Swiss have high private debt, but they have also high assets. Instead of reimbursing they invest in stocks, bonds, gold, etc. With rising asset prices in recent years, this strategy was successful.

    When your economy is better over the long-term, then currency appreciation, better more capital availability and innovation dampens inflationary effects. Since Swiss banks seem to be sure that Swiss inflation is always low they allow not to reimbourse.
    Since the introduction of the cap on the franc, things have changed, the currency does not appreciate any more. The risk you are speaking of, exists.

  5. John

    Wow, very detailed article. The data is a bit dated, but it is interesting to see a historical perspective.
    Interestingly, last year (according to Tranio.com – real estate expert) foreign investors spent €28.1 billion on commercial property in Europe’s leading economy, representing 51% of the total investment amount in the market according to JLL, a global real estate services company. This marks a five-year high for inbound investments, which hadn’t occupied more than 30–40% of the market share in recent years.

  1. Anonymous

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