Cheap money and high demand have pushed up real estate prices in large cities.
It's bad in Frankfurt and Munich - but a change is imminent.
Frankfurt / Munich - In no other metropolis in the world do real estate prices seem as overheated as in Frankfurt: This is the conclusion drawn by the major Swiss bank UBS after an investigation.
As the financial institution explains in a study, the risk of a real estate bubble is particularly high in the Main metropolis in Hesse.
In the residential real estate sector, Frankfurt is ahead of the major cities of Toronto, Hong Kong and Munich in the period between mid-2020 and mid-2021.
This assessment prompts UBS to advise investors to exercise caution when making possible investments.
The specific dangers according to the experts: Real (inflation-adjusted) house prices in Frankfurt have risen annually by around 10 percent since 2016, rents by almost three percent.
Cheap loans would have increased the buying interest and led to the financing of speculative rental projects.
Frankfurt and Munich: Risk of a real estate bubble - change is on the horizon
However, another, still fairly fresh development is made clear from the data, which can be seen in Frankfurt as well as in the second German city with overpriced real estate prices - Munich: A change is becoming apparent on the urban real estate markets in the Corona crisis: Given the increasingly unaffordable living space and new opportunities for flexible work, the population growth has come to a standstill. “The urge to go to the suburbs can also be seen on the Main,” notes a UBS expert.
There has also been a slight rent adjustment in Munich, and growth in the Bavarian capital is increasingly taking place in the suburbs.
The financial experts inevitably come to the conclusion: “Life in the city became less attractive after the lockdowns.
Economic activity has partly shifted from the city centers to the outskirts and satellite cities - and with it the demand for residential property. ”For the first time since the beginning of the 1990s, prices outside the cities rose faster from mid-2020 to mid-2021 than inside.
This development in favor of less urban areas will continue.
Real estate in Frankfurt and Munich overheated - worse than London and New York?
In its “Global Real Estate Bubble Index 2021” for Frankfurt and Munich, UBS-Bank calculated lower values of 2.16 and 1.84 compared to the previous year - with more than 1.5 points there is a bubble risk.
That puts them ahead of London or New York.
Vancouver, Toronto, Paris, Amsterdam, Stockholm, Zurich and Hong Kong are also considered to be significantly overheated with values above 1.5 points.
Properties in Madrid, Milan and Warsaw were classified as “fair valued”.
Meanwhile, increased energy prices are further fueling inflation in Germany *.
For the first time in almost 28 years, the annual inflation rate exceeded the four percent mark in September.
(PF / dpa)
* Merkur.de is an offer from IPPEN.MEDIA