Many major German cities have seen dramatic price increases over the past decade. Munich is a leader in this indicator, here the price per square meter rose by 95%. The main reason for this jump, according to experts, is the urbanization and political situation in Europe.
Urban life is becoming more popular, more and more Germans, as well as EU citizens are choosing big cities to live in. The main indicators of attractiveness are the availability of great supply on the labor market, developed infrastructure, and mobility. But cities and regions will develop differently over the next 5-10 years.
Urban population growth and real estate market prices are closely linked. For example, a 1% increase in population increases apartment prices by 3.5% on average and house prices by 1.9%.
Forecast of the growth of prices in the real estate market in Germany for 5 years by city:
1. Berlin + 14.49%
2. Potsdam + 14.03%
3. Hamburg + 13,86%
4. Wiesbaden + 13.77%
5. Bonn + 12.04%
6. Stuttgart + 10.01%
7. Mannheim + 8.66%
8. Nuremberg + 7.30%
9. Dusseldorf + 6.74%
10. Aachen + 6.33%
11. Munich + 4.39%
12. Dresden + 4.06%
Leipzig + 3.40%
14. Cologne + 3.38%
15. Bremen + 0.21%
There is an increase in demand in the next price segment: the demand for more expensive rental apartments is growing, rents are rising and with them the demand to buy apartments and houses, which in turn leads to higher prices for new and secondary properties.
The real estate market bubble in Germany.
The main concern of experts is about the residential real estate in Germany. Over the past five years, the cost of housing in the country has not only grown but also outpaced the increase in rents. The difference between the two figures in 2020 has reached a maximum.
Rents on new contracts rose 3% in 2020 and 4% at the end of 2018. Compared to 2016, the increase was 18%.
The cost per square meter of housing in the past year increased by 8.4%, and in 2017 – by 7.7%. Since 2012, a square meter has jumped in price by 48%.
Special attention in the report is paid to the residential property markets of Munich and Berlin, where the gap between purchase and rental prices is the largest in the country. The main German metropolitan areas are predicted neither more nor less, the collapse of prices. There was a small chance that it will happen in 2020, but most likely the change will come in 2021.
The cities of the “Big Seven” (Category A) are of heightened concern. According to experts of the Central Committee, the cost per square meter in Dusseldorf is overestimated by 36%, in Frankfurt and Hamburg – 40%, in Cologne – 50%, in Berlin, Stuttgart and Munich – all 75%.