Status: 08/20/2021 4:23 p.m.
While purchase prices for residential property are climbing to new heights in metropolises like Munich, the sharp rise in Germany as a whole seems to have broken for the time being. The situation is different with rents.
Prices and rents for homes and condominiums continued to rise in the second quarter, but the momentum is slowing. A study by the Hamburg research institute F + B, which specializes in the real estate market, puts the increase in the second quarter compared to the previous year at 3.2 percent. But that is less than before.
According to the experts, the reason is the significantly lower price increases for apartments and houses in recent months. For example, condominiums were up 1.0 percent on the previous quarter, and single and two-family houses were only 0.4 percent more expensive. In a year-on-year comparison, apartments increased by 4.5 percent and houses by 3.6 percent. “For the first time in many years, the property segment is dampening the development of the overall index,” explained F + B managing director Bernd Leutner. According to the study’s authors, it is currently not yet possible to say with certainty whether this development represents a trend reversal. “In any case, it becomes clear that the German housing market is on the move,” said Leutner.
Munich remains the front runner
In fact, the ranking of the 50 most expensive German cities for condominiums, which has been compiled by F + B for ten years, shows a very heterogeneous picture. While prices in smaller towns in eastern Germany and in cities in North Rhine-Westphalia hardly move or even fall, they continue to rise in the seven most expensive metropolises. But here, too, according to F + B, there are initial indications that the pain thresholds are gradually being reached. This applies both to the Munich area and to the city itself, where the 15,000 euro limit per square meter was recently exceeded.
Nevertheless, the prices for condominiums in Baden-Württemberg and Bavaria – especially the Munich area – continued to rise the fastest. With an average price per square meter of 7190 euros in the second quarter, Munich remains by far the most expensive property location in Germany – followed by the seven surrounding municipalities. Frankfurt (5460 euros), Hamburg (5280 euros) and Stuttgart (5220 euros) are also among the leaders in real estate prices in metropolises with more than 500,000 inhabitants. However, in these cities, as in Berlin, apartments are on offer well above the 10,000 euro per square meter mark.
In contrast, prices in other regions and cities in Germany have eased somewhat. In some previously coveted places such as Heidelberg, Garmisch-Partenkirchen and Konstanz, even declines were recorded. Overall, prices for condominiums and private homes fell in 13 of the 50 most expensive cities in Germany in the second quarter compared to the same quarter of the previous year.
Rents are picking up again
It looks completely different with rents. Here, the experts from F + B are registering significant increases again after around two and a half years of stagnation. The rents on a national average from the first to the second quarter are 1.1 percent more expensive. In a year-on-year comparison, the growth rate in asking rents was still 0.5 percent.
“The interim relaxation of the corona pandemic in the second quarter of this year apparently led to increased demand for rental apartments, which was hit by a 23 percent reduction in supply on the advertising portals,” said Leutner. This gap between supply and demand has led to the unusually high rate of increase in asking rents on the national average. The gentle decline in the past quarters has thus been reversed again.
Almost 17 euros per square meter
Existing rents nationwide only increased by 0.4 percent from the first to the second quarter, but by 1.4 percent compared to the same quarter of the previous year. “Over the year as a whole, existing rents still grew significantly faster than new contract rents on a national average,” said the F + B managing director.
Munich remains the most expensive place in Germany. The prime rents in the city are now regularly above the mark of 30 euros per square meter. When it comes to rents for new leases, Munich remained in first place with market rents averaging EUR 16.60 per square meter for a ten-year-old, 75-square-meter, unfurnished standard apartment.