Munich and Hamburg remain expensive
Where to buy property cheapest
By Diana Dittmer
March 20, 2024, 7:14 a.m
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The fall in real estate prices has accelerated across Germany over the past year. According to Postbank, there are also major regional differences. The current “Housing Atlas” shows where the value of condominiums has suffered the most and potential buyers can now find bargains.
The downward trend in real estate prices accelerated rapidly last year and spread to more and more regions. This emerges from the figures in the “Postbank Housing Atlas 2024”, which are based on calculations by experts at the Hamburg World Economic Institute (HWWI). Accordingly, prices fell on average – across all areas and adjusted for inflation – by 10.1 percent compared to the previous year. In 2022, the real decrease compared to the previous year was 0.7 percent.
As the figures also show, the prices for existing condominiums in Germany in 2023 were below those of the previous year in around 96 percent of all regions. A price decline can be seen even without taking into account the inflation rate of 5.9 percent.
Prices fall more sharply in large cities
According to the “Wohnatlas”, which is available from ntv.de, the purchase prices for condominiums in the seven largest “Big 7” metropolises have fallen by an average of 12.7 percent in real terms. In comparison, property owners in other large cities “only” suffered losses of 11.4 percent and in medium-sized cities of 10.8 percent. In all districts together, prices fell noticeably less on average, at 9.7 percent.
After several years of strong price increases, the adjustments were “particularly noticeable” in the popular large cities and their surrounding areas, said Manuel Beermann, head of real estate product management in Deutsche Bank’s private customer business, commenting on the result. Nevertheless, the prices for condominiums in the greater Munich or Hamburg area, for example, will still be “at a very high level” in 2023. “Fundamentally, this is not always justified,” says Beermann.
According to the study, real estate was more expensive when adjusted for inflation in just 16 regions. The Postbank experts once again point to rising interest rates, uncertain conditions regarding subsidies as well as falling real wages and higher costs for living, construction and renovations as the reasons for the falling prices. Because the demand for condominiums has decreased, prices for condominiums have fallen in many regions of Germany, it is said.
Price fluctuations are particularly high where the supply of real estate is low. The leaders in the top 10 with the biggest real changes compared to the previous year are the Bayreuth district in Bavaria (minus 24.8 percent) and the Erzgebirgskreis in Saxony (minus 21.4 percent). The state of Bavaria is disproportionately represented in the list with four other regions. Conversely, the largest price increases compared to the previous year were in the Werra-Meißner district in Hesse (plus 40.8 percent) and in the districts of Birkenfeld (plus 13.5 percent) and Kusel (plus 11.9 percent) in Rhineland-Palatinate.
Prices are falling, but Munich remains expensive
Munich remains the most expensive place in Germany, even though the prices for condominiums here have fallen by an average of 14.4 percent compared to the previous year, taking the inflation rate into account. In 2023, there was no place nationwide where prospective buyers had to pay more for the square meter – an average of 8,909 euros. The second most expensive city in the “Big 7” was Hamburg with an average of 6,230 euros, ahead of Frankfurt am Main with 6,179 euros per square meter.
According to the price atlas, the lowest real estate prices in Germany are in some eastern German districts. The Vogtland district in Saxony has the lowest value with an average of 936 euros, ahead of the Greiz district in eastern Thuringia with 974 euros, the Altenburger Land district, also in Thuringia, with 993 euros and the Erzgebirgskreis in Saxony with 1059 euros per square meter.
Postbank is already seeing an end to the downward spiral, so potential property buyers should be vigilant now. “Since we are only assuming a dip in prices, which will be followed by increased purchase prices for residential properties, an investment now may be worthwhile,” says Beermann. Whether and when financing a property is worthwhile depends on the individual case, the financial strength of the buyer and the location of the property.
After two years of crisis for those interested in owning their own homes, the financial sector has already reported signs of a cautious revival in the private real estate market. As financing intermediaries, the Schwäbisch Hall building society and the Bavarian savings banks reported, real estate loan commitments to private customers rose slightly again for the first time in the first two months of this year. According to figures from the Bundesbank, almost 14.7 billion euros in interest-linked private housing loans were granted in Germany in January. This is the highest value since March 2023.