As of: April 4, 2024, 6:14 p.m
By: Lilli Schaule
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Real estate prices have been falling since 2022. Despite many new buildings, like here in the Neuperlach district of Munich, this is due, among other things, to lower demand. © Circle: Bihlmayerfotografie/ Imago Photo: Sven Simon/ Imago
According to Postbank, Germany recorded a “downward trend in real estate prices” in 2023. Two cities in Upper Franconia stand out. Why an investment here can be worthwhile.
Bavaria – Real estate prices have been falling since 2022. The trend increased again last year. In around 96 percent of all regions, condominiums cost less in 2023 compared to the previous year - including the inflation rate of 5.9 percent. On average, property prices fell by 10.1 percent. Experts from the Hamburg World Economic Institute calculated the numbers for a Postbank study – the “Postbank Housing Atlas 2024”. The study presents the regions in which purchase prices have fallen the most. A region in Franconia is the front runner.
Strongest price decline in Germany: 24.8 percent less
In the Upper Franconian district of Bayreuth, real estate prices fell the most nationwide in 2023, according to a press release from Postbank. Buyers here paid 24.8 percent less for their property compared to the previous year. Four other Bavarian regions are among the top 10 cities with the greatest cost declines in 2023: the independent city of Kaufbeuren and the districts of Regensburg, Dingolfing-Landau and Neumarkt in der Oberpfalz.
Lower real estate prices due to reduced demand
“In many regions of Germany, prices for condominiums have fallen because demand has fallen slightly - a result of rising interest rates, uncertain conditions regarding subsidies, falling real wages and higher costs for living, construction and renovations,” says Manuel Beermann, Head of Real Estate Product Management from Postbank in the press release. According to Beermann, this reduction in costs will be followed by higher purchase prices. Investing in residential real estate would therefore be worthwhile now.
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Highest price increase in Upper Franconia city
The independent city of Hof is also in Upper Franconia. Property prices here rose by 6 percent last year. This makes the city one of the five regions with the strongest increase in residential property prices compared to 2022. The price per square meter in Hof was 2012 euros. Nevertheless, according to the press release, an investment in Hof is worthwhile: “The relatively moderate prices per square meter in Hof will continue to rise slightly in 2023.”
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Large cities particularly affected: “Real estate prices overheated”
One result of the study is particularly striking, as Postbank's press release describes. The price decline was more noticeable in Germany's seven major cities than in medium-sized cities or rural districts. Here, the prices of condominiums fell by an average of 12.7 percent. In rural districts it was an average of 9.7 percent and in medium-sized cities it was 10.8 percent. “After several years of particularly strong increases, local real estate prices in the metropolitan regions overheated. The adjustments are now particularly noticeable in the popular big cities and their surrounding areas,” says Beermann.
Almost 9,000 euros for one square meter: Munich remains the front runner
According to the study, buyers in Munich paid 14.4 percent less for residential properties than in 2022. Nevertheless, the Bavarian capital is the leader in all of Germany. Nowhere else do buyers pay more for a square meter of living space - 8,909 euros on average. Hamburg follows Munich with an average of 6,230 euros per square meter.
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