Hedonic house price index issued by Hypoport AG: July 2009

Assessment and forecast:

Prices for residential real estate are recovering and the general sentiment in the marketplace is improving. Existing homes, above all, have been witnessing consistently rising prices for three months now. For the first time, prices for apartments and new homes started following the same trend in July. The index for new homes can expected to increase further whereas prices for existing homes will tend to stabilise. Overall, the conditions for acquiring residential property are still very favourable: In light of the new debts that the government is currently incurring, the value of money can be expected to depreciate over the medium term. Hypoport generally recommends purchasing residential real estate as mortgage costs are still low and there are very few investment alternatives that can match real estate in terms of both security and returns. However, advice should definitely be sought on all aspects of the purchase, and the locational factors, above all, should be considered.

The HPX indices in detail:

Increasing: Total index

The index for all types of residential real estate increased for the second time running. Following a minor increase last month (June: +0.07 percent), the total index posted significant gains of 0.36 percent to 287.73 points in July. All of the individual indices increased at the same time, the first month this has happened since April 2008. The strong increase in the total index was mainly driven by the prices for existing homes and apartments. Since the index increased from a relatively low base, it is still 2.88 percent the value witnessed this time last year (July 2008: 296.26 points).

Increasing: Prices for apartments ("apartments")

Following nine successive months of decline, the index for apartments posted an increase for the first time again in July. It increased by 0.39 percent to 95.61 points. The index is still 2.49 percent lower by comparison with last year, in spite of this price increase.

Slightly increasing: Prices for new single-family and two-family homes ("new homes")

Prices for single-family and two-family homes increased in July for the first time since last March. The index posted a slight gain of 0.88 percent and is currently at 101.96 points. The index is therefore 0.96 percent short of the level posted this time last year (July 2008: 102.95 points).

Strongly increasing: Prices for existing single-family and two-family homes ("existing homes")

July marked the third consecutive month in which the index for existing homes increased. The upward trend was strengthened by this 0.66 percent gain. At currently 90.16 points, the index is still 5.35 percent lower than the level witnessed this time last year (July 2008: 95.25 points).