Anyone who cannot buy an apartment in Munich rents one instead, moves to the surrounding area or to the surrounding cities – with corresponding consequences for municipalities such as Augsburg, Ingolstadt and Rosenheim. In a special report by the Real Estate Association of Germany (IVD) South on the cities mentioned and the Munich metropolitan region, Stephan Kippes, managing director of the Munich IVD market research institute, confirmed the ongoing “stunning decline” in real estate sales in Bavaria.
The reason for this is that the inflation rate remains “far too high”, increased mortgage interest rates and stricter lending criteria. The total monthly housing loans granted to private households in Germany fell sharply, from 32 billion euros in March 2022 to just under 12.3 billion euros last September. “The bottom may already be over,” said Kippes optimistically, at least that is what a provisionally determined value for November 2023 of almost 13.5 billion euros suggests.
This situation has an impact on building permits in Munich, which the IVD predicts will decline to 18 percent between 2021 and 2023. Figures for 2023 are not yet available. Furthermore, not all approved projects are actually implemented. According to the head of market research, high prices are currently creating an overhang – there are more permits than are actually built in the end. Kippes predicts that this trend will only get worse. In addition, construction completions fell by five percent between 2021 and 2022. This creates “relatively high pressure in the cauldron of the housing market, especially in Munich”.
So if you work in Munich but can’t find an apartment, you move to surrounding cities and commute. According to Kippes, the first port of call for this is Augsburg. In 2022, 10,727 people regularly took the train from there to Munich, compared to 7,020 about ten years earlier. However, the IVD Süd does not have any figures for drivers. In second place is Ingolstadt (3336), followed by Rosenheim (2987). “The surrounding cities are necessary to relieve some of the burden on Munich’s housing market,” said Kippes.
Real estate agents are currently finding it more difficult to get rid of their properties
The supply of affordable condominiums in Munich is also rare, although there has been a slight improvement. While 91.7 percent of the apartments cost more than 7,000 euros per square meter in the first half of 2022, the comparative value fell significantly to 68.3 percent in the second half of 2023. There are now more offers for apartments in a price range between 6,000 and 7,000 euros (2023: 18.6 percent, 2022: 4.9 percent) and between 5,000 and 6,000 euros (2023: 8.8 percent, 2022: 2.1). Percent). Even cheaper offers remain in short supply and are below the five percent mark.
The supply of residential properties for sale has generally increased by 13 percent over the same period. However, the brokers are probably finding it harder to get rid of their properties: According to the IVD, the marketing time for the houses and apartments on offer has increased by 65 percent from 8.3 to an average of 13.7 weeks. Kippes emphasized: “If you don’t buy, you rent” – and ensures high competition.
This is also clear in the current special report: the price per square meter of properties for sale is falling slightly, while rental apartments in Munich are tending to become more expensive – from 18.70 euros per square meter in spring to 19.50 euros in autumn 2023. Kippes also pointed out that that political uncertainties also influenced the market. Many potential buyers lack clear framework conditions and security.