Buying your own four walls will remain a financial feat in Bavaria’s cities and surrounding areas for the time being. According to estimates by Landesbausparkasse (LBS), the Bavarian residential real estate market will develop similarly to previous years – with scarce building land and rising prices. What is new is that interest rates for real estate loans are slowly moving up again after years of lows. This was reported on Wednesday in Munich by LBS board member Gerhard Grebler and Paul Fraunholz, managing director of the savings banks’ real estate agency.
The corona pandemic has not slowed the development either: according to LBS, the average price of a used residential property – houses and condominiums together – rose by 13 percent in 2021 compared to the previous year to 381,399 euros, i.e. significantly more than the general inflation rate. The immense regional discrepancies remain: According to the LBS, a used single-family house in 13 districts in northern and eastern Bavaria costs less than 300,000 euros on average, while in Munich and eleven other Upper Bavarian cities it costs over a million.
Accordingly, the brokers of LBS and savings banks are also observing increased demand in their suburbs and in the countryside due to the very high prices in the cities. Another corona-related factor: Many real estate buyers want larger apartments or their own garden, as Grebler explained. “The pandemic has significantly increased the desire for a safe place of your own at home,” said Grebler. According to a survey commissioned by the Landesbausparkasse, more than 70 percent of tenants would prefer to live in their own four walls. According to Grebler’s estimates, the demand for living space in Bavaria will continue to rise, not least because of the admission of many refugees from the Ukraine.
According to LBS, real estate sales rose to 72 billion euros last year – more than twice as much as ten years earlier. This is also largely due to the price increase.