I noticed an interesting report in this week's Buy Munich Property newsletter, Sept 18th 2007, regarding the current state of the German property market:

" The German institute of town planners (Institut für Städtebau) has recently reported on house price trends in Germany (Der Spiegel, August'07). In particular, it reports that house prices are continuing to see upward pressure, particularly in the cities, due to a general housing shortage. On average, the cost of a house in the west is €173k (+1.2% increase over the year), whilst in the east the average price of a house is only €100k (+1.4%). Due to the VAT hike earlier in the year, as well as the recent high price rises in raw materials, construction machinery and energy costs, even fewer houses are now being built currently. In Q1 of 2007, planning applications were down by 44%, with applications for the building of detached and semi-detached houses reducing by 55%. The result is that about 100,000 too few housing units are now being built each year. Munich is by far the most expensive city in Germany: the average price for a detached house is €379,800 with a modest increase of 4.3% over the year. This compares with an average price of €249,300 (+8.6%) in Berlin and €295,100 (+9.1%) in Hamburg. If the German economy continues to pick up, these upward pressures on house prices can only increase. "

Does anyone have any comments on the reported relative house price rises in Berlin & Hamburg, as compared with Munich, whether these are likely to be sustainable, and whether Munich prices are likely to see similar higher growth rates in the future?