Has the trend reversal occurred on the Munich real estate market? According to the Internet portal Immoscout24, prices for condominiums in the city have fallen by seven percent since the beginning of the year, more than anywhere else among the seven largest German cities. This emerges from a press release from the company on Thursday. In the case of single-family homes, there is a similar, albeit somewhat weaker development. Here the decline in Munich is 3.1 percent, also the highest value in comparison with Berlin, Hamburg, Cologne, Frankfurt, Stuttgart and Düsseldorf.
The analysis relates to the period from January to July 2022. 312 German cities and districts with more than 100,000 inhabitants were evaluated. Nationwide, Immoscout24 registered a fall in square meter prices of 6.2 percent for condominiums (single-family houses: minus 4.8 percent). Among the seven largest cities, there were only rising apartment prices in Berlin (plus one percent) and Cologne (2.2 percent).
It should be noted that these are offer prices, i.e. the prices at which objects are placed on the portal. The actual purchase prices may often differ – however, in the event of a downward market trend, they should generally not be higher than the asking prices.
How are these numbers classified? Official values for purchase prices in Munich in 2022 will not be available until early summer 2023, when the City of Munich’s expert committee presents its report, which is based on all purchase contracts concluded in the previous year. For 2021, the annual report had shown significantly rising prices in all categories, with growth of 15.1 percent in the area of apartments.
However, that was before Russia invaded Ukraine and before the significant increase in lending rates – the corona pandemic had not left any traces on the residential real estate market. In relation to the development of the past few years, the currently reported declines would only mean a correction at an extremely high level for the time being.
Stephan Kippes, head of the market research institute at the brokers’ association IVD, is observing price developments very closely. At the end of July, Kippes reported in a special press conference that prices in Munich were no longer rising. However, he did not want to commit to whether they will also sink. The IVD will present its next semi-annual report in mid-September.
When asked about the figures from Immoscout24, Kippes initially reacted cautiously. He emphasizes that it is currently difficult to make forecasts due to the many uncertainties in the global economy, including inflation. “But there is no law that says Munich always has to go up,” says Kippes. Real estate sales have already declined nationwide, and real estate agents have registered “that the marketing time for residential real estate is increasing. If a property is left for a longer period of time, prices are unlikely to rise.” He doesn’t believe in the danger of a real estate bubble in Munich, “but the signals for a trend reversal in prices are there.”