More than in any other German city: Real estate prices in Munich are falling sharply

Created: 05/10/2022 09:06

By: Andreas Hoess

Real estate prices are falling in Munich.

Nevertheless, it remains the most expensive city in Germany.

© Ulrich Wagner/www.imago-images.de

Real estate prices in Munich have fallen more than in any other German metropolis.

But that only takes a little pressure out of the boiler.

Munich/Hamburg – Nowhere else in Germany have reports of exorbitant purchase sums on the real estate market and moon prices for rents been reported as often as in Munich.

The prices for condominiums in Bavaria's state capital have risen by around 50 percent in the past five years.

While this has long been part of everyday life for seasoned Munich residents, another number is now making people sit up and take notice: In the past twelve months, condominiums in Munich have only increased in price by seven percent, which is a little less than the German average, which was 8.2 percent.

Since May, purchase prices in the Isar metropolis have fallen by 1.9 percent for the first time in many years.

Munich is again the front runner - but this time surprisingly with price declines.

For comparison: condominiums in Frankfurt and Hamburg have also become somewhat cheaper since May, but only by 1.2 and 1.3 percent and not by almost two percent as in Munich.

In Stuttgart and Berlin, on the other hand, they cost 0.4 and 0.7 percent more.

And while house prices in Bavaria's largest economic center fell by 1.5 percent over the summer, they rose by almost six percent in Mercedes' Swabian homeland at the same time.

Real estate prices in Munich are falling rapidly - but why?

But why are prices falling so sharply in the state capital of all places?

With rising interest rates, difficult financing conditions, high inflation and generally greater economic uncertainty, exactly the same factors would have a negative impact on the real estate market in Munich as in the rest of Germany, explains Aiane Linden from the real estate agent Engels & Völkers, who provided the figures.

According to Linden, the fact that the consolidation in Munich is somewhat stronger than in other large German cities is probably only due to the fact that the drop here is greater.

In addition, given the small difference, one cannot actually speak of a real price decline. "It's more of a salutary sideways movement," says the broker.

Prospective buyers should notice something similar when looking at the offers, although they would probably hope for a little more healing.

With a square meter price of over 10,000 euros, you still pay an average of more than half a million euros for a small apartment of 50 square meters in Munich.

Detached and semi-detached houses are even offered for a breathtaking 1.4 million euros on average - for many families this is unaffordable.

This means that Munich is still by far the most expensive place in Germany.

Demand for real estate in Munich is still high

The time when you could sell any property here within a few days at almost any price is over, confirms Aiana Linden, who is responsible for private customer business at Engel & Völkers in Germany, Austria and Switzerland.

The offer is bigger than ever, but interested parties would now examine the property much more closely and would also need significantly longer to organize financing.

But the demand is far too great for a price collapse.

And what about the rental market in Munich, which is also extremely tight?

It, too, is being influenced by the drop in purchase prices – but not in the way tenants would probably like.

"Many potential buyers are just entering the rental market because they can no longer afford the purchase price for their dream property due to the higher interest rates," explains Aiane Linden.

And that means that rental prices are likely to continue to rise for the time being, despite the consolidation on the real estate market.