Market Trends of Germany Condominiums and Apartments Industry
This section covers the major market trends shaping the Germany Condominiums & Apartments Market according to our research experts:
Freehold apartments: Consistent demand maintains steady prices
Freehold apartment prices continued to rise until this spring, with a 10.3% increase in the first half of 2022 (HY1 2022: 4,095 per square meter vs. HY1 2021: EUR 3,713 per square meter (USD 3,964)). Asking prices in Germany and the vast majority of the towns and cities examined by Engel & Volkers plateaued starting in May 2022.
The top 7 cities in Germany experienced moderate price drops in July compared to June, including Munich, Frankfurt, Düsseldorf, and Hamburg. On the other hand, asking prices in Berlin and Stuttgart saw modest gains of +0.4% in the capital and +0.7% in the Baden-Württemberg state capital.
Munich tops the list of the areas examined with an average price of EUR 10,067 per square meter (USD 10,747), followed by Frankfurt at EUR 6,918 (USD 7,386) per square meter and Hamburg at EUR 6,769 (USD 7,226) per square meter. Prices continue to hold steady at a high level because there are still few open listings available in many areas. Living space in urban areas is still in high demand.
Since there are still not enough freehold flats available and there is a significant population influx into the major cities, prices will continue to plateau and no significant downward corrections are to be anticipated.
According to Till-Fabian Zalewski, "Many buyer groups are demonstrating solid credentials in terms of equity, in the best areas in particular, suggesting that small price increases may still be witnessed in select locations. Engel & Völkers predicts modest price increases in desirable areas through the end of 2022 in more than a quarter of the 56 towns and cities studied.
Prices in German cities and towns are steady
While market activity has been active in recent years, residential real estate valuations in Germany have remained extremely constant. Real estate has also been shown to be resilient to crises. For instance, despite the pandemic, the transaction volume in 2021 was EUR 182.4 billion (USD 194.74 Billion) and increased by 11.7% from the year before.
Prices in Germany's major cities are not anticipated to significantly decrease until the end of 2022, despite the recent increase in interest rates. In terms of supply, the recent fall in construction activity due to a lack of suitable land for development and increasing construction costs coincides with the more constrained demand for residential real estate.
Pressure on the rental market is increasing as some buyer's access to credit is becoming more difficult. In preparation for the upcoming winter, buyers are particularly interested in newly constructed homes and existing residences that have undergone energy-efficient renovations and installed contemporary heating systems. "The desire to possess a home of one's own continues to be in high demand.
According to Till-Fabian Zalewski, who emphasizes the importance of location: "Real estate, especially in very good locations, remains a crisis-proof investment - not least because competitive investment alternatives are lacking. The level of supply is still too low to meet demand, a fact that will more than compensate for the higher interest rates."
The average cost per square meter of newly built apartments increased across all major German cities between the first quarter of 2021 and the first quarter of 2022. Apartments were most expensive in Munich with the average square meter price as high as EUR 10.4 million (USD 11.10 Million). In Cologne,on the other hand, the average square meter price was EUR 5,200 (USD 5,552). According to the house price index, house prices in the country have risen steadily in recent years .
