Germany’s Economy Accelerates in the First Quarter, Home Prices Surge

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Germany’s Economy Accelerates in the First Quarter, Home Prices SurgeEurope’s largest economy Germany grew 0.8 percent in the first quarter from the quarter through December due to favorable weather and domestic spending.

Initial data indicates Germany’s economy accelerated 2.5 percent in the first three months of the year, up from 0.4 percent growth in the final three months of 2013, reported the Statistics Office on Thursday.

The government singles out domestic spending to propel growth this year, which is forecasted to be 1.8 percent.

“Positive impulses came … exclusively from within the country,” the Statistics Office said in a statement seen by Reuters. “By contrast, foreign trade put the brakes on economic growth.”

Germany’s central bank recently threw its weight behind the European Central Bank’s plans to ease policy, including negative deposit rates and bond buys, in order to boost euro zone’s economic growth.

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Home prices in the country surged 4.2 percent in the first three months of the year from the previous year on apartment shortage in major cities and cheaper mortgages. Apartment prices rose 5.8 percent, the most of the housing units surveyed, as owner-occupied condos became 4.1 percent more expensive, reported VDP Association of German Pfandbrief Banks. New apartments saw rents shoot 4.3 percent upwards.

“Residential construction is rising, but it’s still far from satisfying the high demand,” Jens Tolckmitt, VDP’s general manager, was quoted in the statement by Bloomberg. “Demand continues to be concentrated in urban centers.”

Germany’s property market boom has the record-low mortgage rates and housing deficit in major urban centres such as Frankfurt and Berlin to thank for. The trend has been due to movement of workers to areas where jobs are available. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com