Buying demand is returning
Rental prices in major cities are rising to record highs
January 10, 2024, 2:29 p.m
The German rental housing market remains tense. In four major cities, rental prices rose by double-digit percentages last year, a study shows. The situation on the purchase property market looks a little better.
According to a study, record rents are being demanded in major German cities. In the fourth quarter of 2023, calls for existing rental apartments across Germany were 1.6 percent more than in the previous quarter and 5.8 percent more than in the same period last year, as the ImmoScout24 portal announced when evaluating its data. Asking rents in new buildings rose by 1.4 and 7.7 percent, respectively. The price per square meter is 8.42 euros for existing buildings and 11.72 euros for new buildings.
Although demand for rental apartments has fallen slightly, it remains at a high level, particularly in the eight largest German cities. “New price records show how tense the rental market in major cities continues to be,” said the managing director of ImmoScout24, Gesa Crockford. This particularly applies to new buildings. “In Munich you pay an average of 24 euros per square meter,” said Crockford. “In Berlin, new apartments are 20 percent more expensive than a year ago.” The price per square meter here is now 19.45 euros. The capital remains the most tense rental market in Germany. Offer prices also rose by double-digit percentages in Stuttgart (+14.6 percent), Cologne (+14.1 percent) and Munich (+12.8 percent).
When looking for a new apartment, people increasingly looked outside the big cities. “There you will find a larger selection and cheaper rents,” said Crockford. The portal has recently registered an upswing in the purchasing market after a year characterized by restraint. There was a clear upward trend in asking prices for new apartments in the fourth quarter. The trend is also positive for existing properties. “There are only occasional price reductions,” it said. In the fourth quarter, new condominiums across Germany rose in price by an average of 2.4 percent compared to the same period last year, and new houses even rose by 2.9 percent. However, there were still slight declines in the inventory – 1.6 percent for condominiums and 0.5 percent for houses.
“In view of the lower inflation rate and the interest rate situation becoming more stable again, a certain degree of planning security and thus purchasing demand are increasingly returning,” said Crockford. “For many people, the dream of owning their own home is getting a little closer again.” There is still a surplus of supply in the market. However, this is likely to gradually decrease as demand increases from the second half of the year. “It cannot be assumed that prices will fall again as noticeably as in the second half of 2022,” said Crockford.