From EUR 8,150 per square meter a year ago to EUR 9,000 in the fall to EUR 9,500 now: The purchase prices for existing condominiums in Munich have risen significantly over the past six months, but not as dizzyingly as in the previous six months. Stephan Kippes, head of the market research institute at the brokers’ association IVD, presented this balance sheet in a press conference on Thursday.
The trend in this particularly important real estate sector also reflects the development of the entire residential property market. “The price spiral continues to spiral upwards, but the increases in spring 2022 for most property types will be significantly more restrained than in the previous survey,” says the market report.
Kippes does not expect the trend to reverse in the next few months: “Under normal conditions, we have to assume that there will tend to be a moderate increase until autumn.” Possibly it could also go in the direction of stagnation. However, he also emphasized that several imponderables currently make forecasts difficult.
Kippes named three factors: “The dreadful war in Ukraine and the associated sanctions could bring recessionary effects.” That would possibly dampen the rise in prices. It could also have “braking effects” “if interest rates rise noticeably”. The question arose as to what Kippes would advise people who currently want to buy a property and are now afraid of rising loan interest rates. He urged caution: “I wouldn’t buy out of panic because interest rates are rising. You should really examine the property sensibly and only buy it if it really fits.”
The third topic Kippes addressed was inflation, which was last given a rate of 7.3 percent for Germany. “The topic will also move the real estate market,” predicts the market researcher. “If inflation is more than three percent, people consider whether they are better off with very stable real assets.” The inflation factor, in turn, could have a price-driving effect.
In a ten-year comparison, the strong increase is particularly impressive
A look at the past ten years shows what proportion, according to calculations by the IVD Institute, inflation had in the price development or – if you look at it the other way round – how much the prices would have risen even without inflation: in 2012 the price for existing Condominiums with a good quality of life (the second best of four categories) in Munich are still around 3700 euros and have risen to today’s 9500 euros within ten years. Adjusted for inflation, this value is 7950 euros in spring 2022, still more than doubling within ten years.
Newly built apartments are naturally even more expensive. In this segment, the IVD Institute has determined a current average price of 11,700 euros per square meter. Here, too, the leap within a year is enormous, since the price was still 9,950 euros in spring 2021 (autumn 2021: 11,100 euros). The ten-year comparison is impressive again: in spring 2012, a new condominium cost 4,800 euros per square meter.
The range in Munich can be seen when looking at the prices in the 60 or so districts, which the IVD Institute lists individually and divides into the categories simple, medium, good and very good. In the four “simple” districts of Am Hart, Hasenbergl, Langwied and Neuperlach, prices per square meter for existing apartments are around 7,300 euros. The value for “very good” locations such as Alt-Schwabing, Haidhausen or Ludwigvorstadt is 15,000 euros.