OREANDA-NEWS. October 26, 2012. The recovery in new housing construction is continuing: In seasonably adjusted terms, 34% of borrowers supported in the framework of the KfW Home Ownership Programme were planning a new construction or the purchase of a newly constructed owner-occupied home in September 2012 - that is 1.7 percentage points more than the previous month. At 4.8 percentage points the figure is significantly higher than the same month the previous year. This is the result of the KfW Indicator Own Home Construction, which KfW regularly calculates exclusively for the magazine "Wirtschaftswoche".

"Lower interest rates, a stable labour market, increasing real wages and a strong investor preference for material assets are fostering new construction activities," commented Dr Jorg Zeuner, the new Chief Economist of KfW Bankengruppe, regarding the current numbers.

The official early indicators confirm the positive outlook of the KfW Indicator Own Home Construction. The number of building permits for new home construction from January to July 2012 was considerably higher than the previous year's value, with a plus of 7%.

Increasing real estate prices reflect the high demand for housing - particularly in the urban agglomerations. According to a study of the Cologne Institute for Economic Research (July 2012), the main drivers of this upward price trend are reurbanisation processes and investor preferences for material assets. Currently there are no signs of a speculative bubble in the German real estate market. However, in certain urban agglomerations the prices are climbing faster than in the past.