The rise in real estate prices in Germany has recently lost momentum. In the long term, according to a recent study, the trend continues to point upwards - but not in all federal states.
Hamburg - For many years, real estate prices in Germany have continued to rise. But the current high inflation and rising interest rates have halted the upward trend. Future development is expected to vary greatly depending on the region. This is shown by the "Postbank Housing Atlas 2023", for which the Hamburg Institute of International Economics (HWWI) has prepared a purchase price forecast up to 2035.
Housing atlas promises long-term rising real estate prices - but not everywhere
Accordingly, property owners in parts of Germany can continue to expect growth. In 43 percent of Germany's 400 districts and independent cities, experts predict an increase in purchase prices of more than 0.15 percent per year in real terms until 2035. Overall, this corresponds to an average increase of at least two percent by 2035.
The forecasts predict real price increases for large parts of the southern and northwestern region, the so-called "Big 7", i.e. the seven largest German metropolises (Berlin, Hamburg, Munich, Cologne, Düsseldorf, Frankfurt/Main, Stuttgart) and their surrounding areas as well as other major cities. In the territorial states of Baden-Württemberg, Bavaria, Hesse and Schleswig-Holstein, purchase prices are rising on average across all regions.
"Postbank Housing Atlas 2023": Potsdam is the frontrunner in terms of value growth for real estate
Bavaria in particular is showing an increase in value. According to the study, six Bavarian districts or cities are in the nationwide top 10 regions with the highest predicted price increases. At the same time, real estate prices in some Bavarian districts are already higher than in the "Big 7" metropolises. For example, prices in Ebersberg and Dachau are now higher on average than in Berlin, Cologne or Düsseldorf.
In Potsdam, real estate prices are expected to rise © the most, according to the current "Postbank Housing Atlas" Schoening/Imago
The front-runner in terms of price growth is said to be the Brandenburg state capital Potsdam, with an annual increase of 2.71 percent in real terms. It is followed by the district of Erding with a forecast growth of 2.13 percent per year and Leipzig with 2.12 percent.
"Postbank Housing Atlas 2023": Munich has the highest growth among the "Big 7"
Among the "Big 7", Munich is said to have the highest increase in value. The price per square metre for condominiums in the Bavarian capital is expected to grow by more than two percent annually in real terms until 2035. Hamburg brings up the rear, with real estate experts predicting annual growth of only 0.29 percent for the Hanseatic city.
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Among the independent cities with more than 100,000 inhabitants, property owners in Dresden, Ingolstadt, Mainz, Münster, Darmstadt, Freiburg im Breisgau, Heidelberg and Jena can also expect positive real price developments of more than one percent per year.
"Postbank Housing Atlas 2023": Sharp price slumps expected for rural, eastern German regions
Almost half of all German regions are on the losing side, where prices for condominiums are expected to fall in real terms and be at least two percent below today's level by 2035. In one in ten areas, prices are stagnating with values between minus 0.15 and plus 0.15 percent per year.
The experts predict slightly falling or stagnating prices for many rural regions in Saxony-Anhalt, Thuringia, Saxony, Mecklenburg-Western Pomerania and Saarland. Stronger price slumps are expected for the rural areas of the eastern German states away from the big cities.
"Postbank Housing Atlas 2023": Suhl and Wartburgkreis are the biggest losers
The biggest losers are owners of condominiums in the city of Suhl and the Wartburgkreis in Thuringia, which are expected to lose the most value of all German regions. In parts of North Rhine-Westphalia, too, the trend is clearly downwards. Among the major cities with more than 100,000 inhabitants, the Ruhr cities of Herne, Gelsenkirchen, Hagen, Duisburg, Oberhausen, Mülheim an der Ruhr and Bochum as well as nearby Remscheid in the Bergisches Land are affected by price declines, according to the forecast.
Purchase price forecast with the HWWI housing market model
As part of the purchase price forecast for the 400 independent cities and districts, supply and demand developments are modelled on the basis of various regional data on population and age structure, household size, income development as well as housing expenditure and supply. The HWWI housing market model shows how these factors influence each other. At the end of the model calculation, the purchase price forecast for the period 2022 to 2035 is shown, showing the average annual real price trend.