Property prices rose to new levels in 2021

(March 27, 2022) In the second Corona year 2021, residential property prices in Germany continued to rise, and at a significantly faster rate than in previous years: in 98% of all German administrative districts and independent cities, apartment buildings existing ones have become more expensive. On average across all regions, the inflation-adjusted price increase from 2020 was 14.2%. In 2020, the increase was 9.6%, the year before it was 9.3%. Prices have risen not only in the metropolises and, sometimes even more, in neighboring areas. The trend has also captured previously rather unnoticed cities in eastern and central Germany, such as Chemnitz or Salzgitter.

Consistently low interest rates, unbridled demand and stagnant supply have driven the real estate market in Germany in 2021. “The new real estate market records are supported by fears of interest rate hikes and rising inflation. Many Germans are fleeing to concrete gold and increasingly placing cities in the second row, after metropolises such as Munich are already considered overvalued, “explained Eva Grunwald, Head of Real Estate at Postbank.” The crown pandemic has only strengthened the desire to have a home of one’s own and expanded the range “.

Munich continues to be the most expensive place to stay, Düsseldorf with the highest price increase

The most expensive place in Germany is still Munich. Nowhere else do you have to pay as much per square meter as in the Bavarian state capital. The price of existing condominiums increased by a further 9.9% compared to the previous year and in 2021 it stood at an average of 9,732 euros / m². The second most expensive city is Frankfurt am Main, with an average of € 6,586 / m². In the ranking of the so-called Big Seven, the seven largest German metropolises, Hamburg is third with 6,489 euros / m², ahead of Berlin with 5,528 euros / m².

Düsseldorf recorded the highest price increase among the Big Seven. At 15.3%, it was significantly higher than in 2020 (9.4%) and 2019 (7.8%). Hamburg was ranked second with an increase of 13.4%. The Hanseatic city is therefore catching up with Frankfurt in terms of price levels, where prices only increased by 5.8%. Even in Cologne, the relatively cheapest city of the seven major cities, prices have risen significantly by 11.8%. However, in 2021 a square meter costs only half as much as in Monaco.

The proximity to the North Sea is becoming more and more expensive and the district of Munich is catching up with Starnberg

The nation’s most expensive district is still located near the North Sea: in the North Frisian district, which includes the famous islands of Sylt, Föhr and Amrum, but also holiday resorts such as St. Peter Ording, the square meter of occupied apartments by the owners it cost an average of 7,977 euros last year. Here, too, the year-over-year increase accelerated to 14.3% (2020: 4.8%).

In addition to North Friesland, the top 10 most expensive districts include only the districts of the Munich commuter belt and in the tourist regions at the foot of the Alps. In this group, prices in the district of Miesbach have risen more to 14.9%, therefore the gap compared to North Frisia in 2021 is just a few euros. In the Starnberg district, growth weakened to 6.2%, pushing the region out of third place compared to the Munich district.

For all the districts mentioned, the following applies: prices per square meter are higher than ever. Only in three of the ten districts mentioned is the average price per square meter of existing apartments still below € 6,000, four of which are already above € 7,000.

Prices in the areas surrounding the “Big Seven” are rising more than in the metropolises themselves

In terms of price dynamics, the Big Seven outperformed the cities. The Berlin commuter belt recorded the greatest increase, where the increase in demand met a particularly narrow supply: while the plus for condominiums in the capital was 8.1%, it reached 45.2 % in the Oder-Spree district. And although Potsdam is now almost as expensive as Berlin, prices have risen by a further 27.3%. In Dahme-Spreewald, buyers had to pay around 26% more in 2021 than in 2020, in Märkisch-Oderland 23.7%. As a result, the differences in price levels are narrowing, but they are still there: while Berlin was owed 5,528 euros / m² in 2021, it was 3,490 euros / m² in Oder-Spree, for example.

“For two years, working from home has made many people think of moving from the big city to the surrounding area. Despite the soaring prices, average incomes are more likely to be able to afford an apartment with a studio and a garden, while in large there are no family-friendly properties in the city, “says Ms Grunwald.” But those interested should take a closer look. Potsdam is now almost as expensive as Berlin and the difference in price between Munich or Stuttgart and their surrounding areas most famous is shrinking considerably. “

In Germany’s most expensive city, Munich, prices increased by 9.9% in 2021, by 14.9% in the district of Miesbach, by 14.2% in Ebersberg and by 12.1% in Freising. Although real estate in Hamburg increased by 13.4%, the surrounding districts of Segeberg (17.8%) and Pinneberg (17.2%) were able to surpass it. However, despite the rush to catch up, apartment buildings in the surrounding area are still considerably cheaper than in the Hanseatic city. The price per square meter in the Segeberg district is only about half of 3,371 euros / m². A similar picture can be seen in Cologne, where the price increase (11.8%) was followed by the districts of Rhein-Sieg-Kreis (16.3%), Rheinisch-Bergischer Kreis (16.9%) and Mettmann (13.2%). . Around Frankfurt am Main, for example, the district of Main-Kinzig, Groß-Gerau and the district of Wetterau experienced higher price dynamics than the city. The only exception is Düsseldorf, where the increase was even greater than in Mettmann (13.2%) or Duisburg (11.9%).

High price increases in previously cheap cities

The high prices in the Big Seven also ensure that other cities come on fire. Germany’s ten most expensive cities include Potsdam, Freiburg im Breisgau and Heidelberg, all three with prices per square meter in excess of € 5,000.

In general, existing condominiums have increased in value in all major cities with more than 100,000 inhabitants, the average price increase there over the previous year was around 12%. They increased the most in Erfurt with 29.5%, followed by Potsdam with 27.3% and Chemnitz with almost 22%. In Bielefeld, Salzgitter and Halle (Saale) the increase was over 18%. “There are clear catch-up effects in large, inexpensive cities in eastern and central Germany,” said Ms Grunwald of Postbank. “While the Big Seven have been climbing new heights for years, there have been no significant increases in major cities in central and eastern Germany for a long time.”

Despite the start of the recovery rush, many of these cities are still cheap compared to other German cities with more than 100,000 inhabitants. In 2021, existing condominiums in Salzgitter, Lower Saxony, cost only about one sixth of the price of 1,666 euros / m² compared to Munich. In Chemnitz, Saxony, one square meter was available for around 1,672 euros, in the capital of the state of Saxony-Anhalt, Magdeburg, for 1,984 euros.

Don’t underestimate medium-sized cities

For those interested in buying, the so-called medium-sized cities are also worth a look. “Centers with short distances, tidy urban centers, good infrastructure and proximity to the surrounding green area attract property seekers who can no longer find attractive properties at relatively low prices elsewhere,” explained Ms Grunwald. “However, supply in cities of this size is often lower, so even small changes in demand behavior or supply structure can lead to significant price changes from the previous year.” Among cities with 20,000-100,000 inhabitants, high price increases were with Hof, Amberg, Kempten (Allgäu) and Passau four in Bavaria.The university town of Hof, located on the Saale, was still accessible with an average of 1,884 euros / m² in 2021, while in Kempten in the Allgäu almost 4,000 euros / m² have already been billed and also in Weimar (Thuringia), Emden (Lower Saxony) and Frankenthal (Rhineland-Palatinate) prices have increased significantly.

Housing Atlas of Postal Banks 2022

The Postbank Wohnatlas is an annual series of multi-part studies that illuminate the German real estate market from various aspects at the regional level down to the district level. For the present price analysis, which is the first study part of this year’s Real Estate Atlas, the development of real estate prices in Germany’s 401 administrative and urban districts was examined under the direction of graduate economist Dörte Nitt- Drießelmann, senior researcher at the Hamburg World Institute of Economics (HWWI).

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