In 2017, real estate prices in Germany rose by an average of 5.5%
As reported by "Russkaya Germaniya", in 2016, the monetary turnover amounted to 237 billion euros, which is 9% more than in the previous year. Although 2015 had already distinguished itself with a record increase in investments – an average of 19% compared to 2014.
The largest share of funds is invested in residential real estate. At the same time, the number of purchase and sale transactions does not increase significantly, but housing prices are inexorably rising, especially in large cities. This trend has been holding since 2009, when the German economy began to slowly recover from the global crisis.
Among the factors influencing the increase in demand, and consequently the rise in housing prices, experts cite positive trends in the German economy as a whole, stable low lending rates, a lack of supply due in part to a shortage of land for new construction, the influx of refugees, and population growth in cities.
In 2017, real estate prices rose by an average of another 5.5% adjusted for inflation. These figures are provided by experts from the Hamburg Institute of International Economics (HWWI) in their study for the annual Postbank real estate atlas. 5.5% is the average for all of Germany. However, housing prices in the Federal Republic vary greatly by region. Depending on the locality, a square meter can cost from 603 to 6,800 euros.
As before, the most expensive German region, according to experts from the Hamburg Institute, is Munich with an average price of 6,789 euros per sq. m. This is 8.6% more than in 2016. With a slight margin, Frankfurt am Main is in second place. There, a square meter will cost an average of 4,501 euros, 11.1% more than in the previous year. In Hamburg, the third most expensive city for housing in Germany, the price was 4,212 euros per sq. m (plus 6.6% compared to 2016). The biggest price jump last year occurred in Berlin: there, the price per square meter rose by 11.4% and amounted to 3,676 euros.
One way for residents of megacities to save on housing could be to move outside the city. For example, in the Main-Taunus district, near Frankfurt, real estate costs an average of 2,931 euros per sq. m, which is significantly lower than in Frankfurt itself. However, this trend is not relevant for all regions. Near Munich, for example, housing prices remain high. For comparison, in the suburbs of Munich, prices average from 4,563 euros to 5,240 euros per sq. m, which is even higher than prices in Frankfurt.
Although the price increase primarily affects large cities, affordable housing cannot be found everywhere in rural areas either. For example, in the Weißenburg-Gunzenhausen district near Nuremberg in Middle Franconia, the increase in real estate prices in 2017 was 25.3%. In the Sömmerda district in Thuringia, prices rose by 20.3%. And in the Uckermark district in the state of Brandenburg, housing became more expensive in 2017 by 17.3%.
Although, according to the German Federal Bank, real estate prices in many large German cities are already significantly overvalued – on average by 15-30%, growth will continue. In their study, experts from the Hamburg Institute of International Economics made favorable forecasts up to 2030.