7.5.2020 – Owners of apartments can count on substantial increases in value in many regions, especially in the metropolises, in southern Germany and in the northwest. In contrast, there is a risk of losses in eastern Germany. The corona crisis appears to have little impact on the real estate market. This shows a forecast that the HWWI made for Postbank.

The low interest rates mean that the demand for your own four walls continues to rise. In 2019, purchase prices for real estate rose in 90 percent of German counties and independent cities. These are the results of the “Living Atlas 2020” study by Deutsche Postbank AG (Insurance Journal 7.4.2020).

The residential atlas is an annual, multi-part series of studies that examines the German real estate market from various aspects regionally down to district level. The current evaluation was carried out on behalf of the financial institution by the Hamburgische Weltwirtschaftsinstitut gGmbH (HWWI).

The numbers refer to the 401 districts and independent cities in Germany. The financial institution has now provided a forecast on the performance of real estate.

Corona crisis makes rising interest rates unlikely

Postbank generally assumes that the European Central Bank’s (ECB) low interest rate phase, which has been going on for some time, will end sometime. “However, the corona crisis means that prompt rate hikes are unlikely,” explains the financial institution.

A recent assessment by the Institute of German Business Cologne e.V. (IW) on the development of the German real estate market is similar. The institute’s key message is: “Overall, it can be assumed that the housing market sector will weather the crisis better than other assets. This is supported by, among other things, the short and medium-term stability of rents and the development of interest rates. ”(April 21, 2020).

Where it pays to buy

According to the Housing Atlas, existing apartments in the German metropolitan areas and the bacon belts of large cities such as Munich, Frankfurt am Main or Berlin are becoming increasingly expensive for buyers.

Due to the low interest rates, a 70-square-meter apartment in every second district in Germany was paid off within 20 years. “A model calculation by the HWWI with an interest rate of 2.45 percent per year shows that the purchase of real estate is financially manageable, especially in the large cities in the Ruhr area and in East Germany.”

Here, the purchase of a condominium can be financed at a monthly rate of less than 500 euros. In comparison, four times as much has to be spent for the 70-square-meter model apartment in Munich: with a repayment period of almost 20 years, 2,044 euros would be due here per month.

Long-term growth in value until 2030

In 90 percent of the 401 German cities and districts, the current residential atlas shows a price increase. The authors of the study put the national average at 9.3 percent in 2019.

It can therefore be assumed that long-term growth in value can be recorded in at least 2030 in most areas. The exact results would have to be viewed in a differentiated way, “since there are large regional differences in terms of performance”. However, the forecasts are only vague compared to the previous year (April 17, 2019).

Real estate in the south of the country has the highest prices. Of the ten most expensive counties in Germany, nine are in Bavaria. The undisputed leader is the district of North Friesland with the islands of Sylt, Föhr or Amrum.

The most expensive cities and counties without the top seven metropolises

City / district

federal state

Price per square meter 2019 in euros

Purchase price increase in percent *

North Frisia

Schleswig-Holstein

6,452.41

14.06

Miesbach

Bavaria

6,127.15

7.71

Starnberg

Bavaria

6,079.85

6.91

Munich (district)

Bavaria

6,043.45

6.80

Fürstenfeldbruck

Bavaria

5,316.00

3.90

Dachau

Bavaria

5,296.53

4.91

Ebersberg

Bavaria

5,151.73

1.98

Freising

Bavaria

4,949.39

10.99

Garmisch-Partenkirchen

Bavaria

4,543.01

8.08

Erding

Bavaria

4,472.57

0.63

Munich moves with the surrounding area

In the meantime, seven German counties have exceeded the price limit of 5,000 euros per square meter. In North Friesland, buyers of residential property face an average cost of 6,452 euros per square meter. The small price slump of 2018 is behind the region (March 28, 2018). In 2019, prices rose 14 percent.

According to the authors of the residential atlas, the list of the most expensive districts shows that the high property prices in the Bavarian capital also have an impact on the surrounding area. Buyers in Miesbach, Starnberg and the Munich district would have to pay more than 6,000 euros per square meter for home ownership.

Brandenburg is the winner in the east

Compared to the old federal states like Schleswig-Holstein or Bavaria, the situation in the east is often more critical. Here the authors speak of negative growth rates. “In plain language: The properties there lose value annually.”

Brandenburg is the winner in the new federal states: “With an increase of around 48 percent, the district of Uckermark represents the region with the greatest increase in value within one year. Home ownership in Frankfurt (Oder) will also cost around a third more in 2019 than in the previous year, ”said Postbank.

Living Atlas (Image. Postbank)

Munich and Main metropolis on top places

Munich remains among the top German cities. Within a year, property prices for existing apartments rose by 6.19 percent, the square meter costs an average of 8,079 euros.

Frankfurt am Main is in second place. A price increase of almost twelve percent was recorded here, prices rose to 5,687 euros per square meter.

For comparison: New buildings are the most expensive in Stuttgart and Munich. Leipzig recorded the largest price increase for these properties. The cheapest four walls are in Bremen, Dresden and still in Leipzig, according to a survey by “Immoscout24.de”, a brand of Immobilien Scout GmbH. The portal had analyzed the purchase prices for new buildings in major German cities at the beginning of the year (February 25, 2020).

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