Where will property prices rise the most

Real estate prices: forecasts, news, studies of real estate price developments

Real estate prices in Germany have only known one way for years: up. The dream of their own four walls can therefore be realized for fewer and fewer people. And the corona crisis is not causing a decline in the prices of houses and apartments on the real estate market - these are even climbing. Experts and scientists regularly examine the real estate price situation.

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We show you the latest studies, figures and forecasts on the price development of real estate in Germany in a news ticker that is constantly updated.

Latest developments in property prices

Read the most important current news, studies and forecasts on the development of property prices in Germany here.

Is a real estate bubble looming in Germany?

April 2021: Since 2015, the prices for single and two-family houses have risen by around 35 percent across Germany, according to figures from the Kreditanstalt für Wiederaufbau (KfW). Now the institute asks itself in an investigation: What drives residential property prices - risky speculation or solid calculation? The longer the price trend continues, the more the KfW will be asked whether a property price bubble will expand and burst - with serious macroeconomic consequences. The conclusion of the development bank: The economic risks are not yet cause for concern, but have increased further.

Alarming development in the home ownership rate in Germany

January 2021: The proportion of people living in owner-occupied housing in Germany fell for the first time since 1993, according to an analysis by the Berlin research institute Empirica. According to this, only 42 percent of citizens live in their own four walls. In no other country in the EU is the home ownership rate so low. Younger people in particular can no longer afford to buy their own home, given the steadily rising real estate prices, because they are unable to raise the equity they need to buy a house or apartment.

House prices are rising, building prices are not

January 2021: In the third quarter of 2020, real estate prices in Germany continued to rise. Apartments and houses were 7.8 percent more expensive than in the same period last year, according to the Federal Statistical Office. In the months of July to September last year, purchase prices rose by 2.6 percent compared to the three months before. However, construction prices in Germany fell by 0.1 percent at the end of 2020. The Federal Statistical Office is responsible for the reduction in sales tax.

Rent or Buy? A map of Germany helps with the decision

September 2020: The ratio of purchase to rental price level can provide information on whether it is worth buying a property in a certain region. In order to compare prices, a factor is calculated that indicates how many average annual rents a condominium costs on average. The lower this factor is, the more it is worth buying a property.

The regional differences are very large in Germany. While in the Burgendlandkreis in Saxony-Anhalt just eleven net rents have to be spent on property purchases, in the district of North Friesland on the North Sea it is 72 net rents.

Corona crisis reinforces the dream of owning your own home

August 2020: During the Corona crisis, according to a study by the consulting company F + B, the prices for one and two-family houses rose more than those for condominiums. Accordingly, houses were 2.9 percent more expensive in the months of April to June 2020 than in the first three months of the year. The prices for condominiums climbed only 1.3 percent in the same period. Compared to the same period in the previous year, house prices even rose by nine percent and house prices by 5.9 percent. For the first time in many years, private homes instead of rents dominate the residential index.

Germans rely on real estate as an investment in the Corona crisis

August 2020: Real estate is the most popular investment among Germans during the Corona crisis, according to a survey by the opinion research institute Yougov on behalf of the asset manager Commerz Real. 56 percent of those surveyed see them as useful for private wealth creation. In a comparable survey from February 2020, only 51 percent of those surveyed said that. In the Corona crisis, people are apparently placing particular emphasis on secure investments. 49 percent of those surveyed attributed this attribute to real estate. Before the Corona crisis, it was only 45 percent.

Insider tip regions are experiencing sharp increases in property prices

April 2020: According to the Postbank Housing Atlas, real estate prices rose the most in rural regions in 2019. In the Uckermark in Brandenburg, increases of more than 48 percent were recorded. In the national German average, the increase was 9.3 percent. The sharp increase affects regions in which only a few apartments and houses are offered for sale. "The low supply already led to high price increases with a slight increase in demand," says the study.

German real estate market: price development amazes economists

February 2020: The purchase prices of condominiums in large cities in Germany rose by almost ten percent in 2019, but the average rents in Germany only rose by 3.5 percent compared to the previous year. Experts are concerned about the fact that purchase prices have risen faster than new lease rents every year since 2011. The price cycle has peaked on the rental market, while purchase prices keep rising due to the low interest rates. With ever lower interest rates, more and more price increases could be served. According to economists, this leads to a fragile situation.

Development of building land prices in Germany

Real estate prices in Germany have been rising for years - with large regional differences, of course. According to calculations by the Federal Statistical Office, a square meter of ready-to-build land cost 189.78 euros in 2019 - more than ever before. In 2009, those willing to build only had to spend 122 euros per square meter. In Munich in the same year 2019, one square meter of building land in a prime location cost a total of 5,900 euros. Ten years earlier, buyers could still purchase the square meter there for around 1,600 euros.

Basically, the prices for building land increase with the size of the municipality. In municipalities with fewer than 2,000 inhabitants, one square meter of ready-to-build land costs an average of EUR 66.04. In the 14 largest German cities with at least half a million inhabitants, it was 17 times as much at 1,128.33 euros, as calculated by the Federal Statistical Office.

The development of prices for condominiums and houses in Germany

Real estate prices have exploded in recent years, especially in the seven largest cities of Berlin, Hamburg, Munich, Cologne, Frankfurt, Stuttgart and Düsseldorf. In 2019, the purchase prices for condominiums there rose by around ten percent compared to the previous year.

In Munich, the price increase of around seven percent was somewhat lower, according to an analysis by the Central Real Estate Committee (ZIA). The yields are falling because the rents there have risen only very slightly.

Real estate prices are lower in smaller towns and in rural areas. Buyers in sparsely populated rural areas get the cheapest off.

According to the ZIA, the purchase prices for condominiums rose by 9.7 percent in 2019 on average in Germany. On average, buyers here have to expect 2,660 euros per square meter.

For single or two-family houses, the average square meter price was around 2,800 euros - an increase of 9.3 percent compared to the previous year. In Munich, the square meter for a centrally located condominium cost around 11,700 euros in January 2021, according to Numbeo.

What the development of real estate prices depends on

The development of real estate prices depends on many factors, we will name the four central ones.

1. Development of income

As incomes rise, so do real estate prices. Because when people earn more money, the demand for real estate also increases. Because the supply is becoming so scarce, real estate is becoming more expensive. If the average income is lower, demand falls - and with it, prices fall with a time lag.

2. Development of interest rates

The low interest rates on home loans are also having an impact on property prices. Due to the constantly falling interest rates, real estate prices are also rising - because if home buyers have to pay less interest to finance their own home, then they can afford a higher purchase price. In addition, the low interest rates ensure that the demand for real estate increases - and the price increases with the demand.

3. Real estate as a safe investment

Real estate is becoming increasingly popular as an investment. In times of crisis, in particular, people increasingly rely on houses and real estate - and invest less in other forms of investment. The price development on the German real estate market also enables significantly higher returns than many other forms of investment. And so it is not only Germans who are investing in owner-occupied homes, but more and more international investors are also investing in the secure German real estate market.

4. Development and behavior of the population

If the population grows, it can be assumed that the demand for real estate will also increase - and with it real estate prices. The large influx of people into major cities in recent years has also led to the very high prices, especially in these cities. Because the prices there are now very high, many people there can no longer afford to buy real estate and are looking for a home in the metropolitan area.

This in turn leads to a price increase there. The price increases in the surrounding areas of Berlin, Hamburg, Munich, Cologne and Stuttgart have even been higher since 2017 than in the cities themselves.

The trend towards smaller households is also reflected in real estate prices. According to the Federal Statistical Office, more than 45 percent of people will live in single households in 204o. In 1991 it was 33.6 percent. However, the number of people in larger households has been falling for years. Because fewer people need more space overall per apartment, this effect can also increase real estate prices.

Rent or buy - the eternal question

Many people are wondering whether a purchase is still worthwhile given the constantly rising real estate prices. The answer: it depends. A comparison of purchase and rental prices in a region provides an indication of whether it is worth buying a property. The factor of how many annual rents are needed to buy a property can provide information about this. According to the Postbank Residential Atlas, the regional differences are very large. While buyers in the Burgenlandkreis in Saxony-Anhalt only need eleven net rents to finance their own home, there are 72 in North Friesland.

For the experts at Postbank, buying real estate is definitely worthwhile in regions in which less than 22.5 annual rents have to be spent on real estate. "If the purchase price is in this range, buyers often drive cheaper than tenants. The low interest rates then allow monthly payments that do not exceed the local rent." At the same time, the buyers built up their wealth because their own four walls are a good way to provide for old age.

According to the experts, there is a risk of overheating, especially in the seven A-cities, i.e. the cities with more than 600,000 inhabitants. In Berlin and Hamburg buyers have to spend 36 annual rents on their own property, in Munich it is 37. "If real estate prices far exceed the rent level, this can be an indication that expected future value gains have already been added, at least in part, to purchase prices were ", says the study.

According to experts from Stiftung Warentest, buying real estate is worthwhile despite the rising real estate prices - because interest rates are so low. In addition, the price increase has weakened. The purchase is especially worthwhile if rents continue to rise.

Real estate prices: The most expensive cities in Germany

Anyone who wants to buy property in a major German city has to dig deep into their pockets. But not only the region is decisive, but also what the buyers want to buy.

For example, those willing to buy a single-family home with around 120 square meters in Frankfurt have to pay a higher price than in Düsseldorf. The square meter of building land, on the other hand, is more expensive in the Rhine metropolis than on the Main.

We'll show you in which seven cities it is most expensive to buy a house. The house prices are average values ​​of prices for single-family houses, semi-detached houses and terraced houses, which are based on prices offered in real estate portals.

    German real estate prices in international comparison

    According to a study by the management consultancy Deloitte, German real estate prices in 2018 were only in the middle in an international comparison. For the study, property prices from 16 European countries were compared with the average disposable income there. The cheapest way to buy a house is in Portugal and Belgium, and the most expensive in the Czech Republic.

    According to Deloitte, five to six annual salaries are enough in Germany to buy a 70 square meter apartment. The same applies in Austria and Norway. But buying real estate is more expensive in eleven of the countries examined. In the Czech Republic, people would even have to pay eleven annual salaries for an apartment.

    However, the regional differences are very large in Germany. In large cities and metropolitan areas in particular, people have to pay much more for a 70-square-meter apartment.

    Real estate prices 2030: forecasts and theses

    Real estate prices in Germany are high - but will it stay that way? A study by Schwäbisch Hall and the University of Freiburg from March 2020 dared to look into the future. The forecast: property prices will continue to rise until 2030. According to the study, prices will even increase until 2060, especially in sought-after locations in the south of the country and in metropolitan areas - because the high demand will continue.

    Although the population is declining, according to the researchers, the demand for living space is increasing. Because the trend towards small households will continue. The number of households will rise by six percent by 2030. Despite the shrinking population, the number of households will be the same as it is today, according to forecasts by the researchers by 2060. And the living space per person continues to increase: Today it is 45 square meters per person, in 2030 it will be 49 square meters per person.

    The Hamburg World Economic Institute also comes to the conclusion in the Postbank Housing Atlas that prices will continue to rise in many places by 2030. "In more than half of the 401 German districts and cities, homeowners can expect their property to increase in real value by at least 2030", it says there.

    According to the experts, the districts around Munich will have the most violent price increases. Even in Munich itself, things should go even higher. Rural regions in the east, on the other hand, certify a standstill or even decline in property prices.