For a property investor, the German real estate market is currently ticking a lot of boxes. The economy is booming, unemployment is falling, wages are starting to rise, residential property prices and rents are soaring and international demand for commercial property in the country is increasing every year.
The number of unemployed people in Germany is continuing its downward trend, reflecting the current robustness of Europe’s largest economy, supported by strong domestic spending and solid global trade. Germany's unemployment rate ticked downwards in March, hitting 5.3% in seasonally adjusted terms, according to data released on the 29th of March by the country's Federal Employment Agency (BA). That means the number of jobless people in Germany fell below 2.5m in March, representing 19,000 fewer unemployed people from the month before. Compared with the same month a year ago, the jobless number fell by 204,000.
Germany has recorded robust economic expansion in recent months, causing some to raise concerns about an overheating of the economy. The country's gross domestic product (GDP) is projected to grow by at least 2.7% this year, which would be the strongest pace since 2011. The low unemployment is also expected to put upward pressure on wages. After a decade of wage restraint on the part of German labour unions, they are now seeking to capitalise on the jobs boom by pushing for salary increases in wage talks with employers.
However, according to a report by German broadcaster Deutsche Welle (DW), Germany's cities are facing a crisis: They're just too popular. Living space is getting increasingly tight and property values and rent prices are skyrocketing.