In which cities of Germany are the most expensive and cheapest apartments for sale? What kind of German real estate has become popular to invest in lately? How have housing prices changed in the last 10 years, and how has this dynamic changed in 2023? The answers to these questions with numbers and details are in our expert material.
Irene Verkhovetskaya, general manager of Estate-Service24, told us about the sharpest drop in prices in Germany, interest rates and the cost of real estate in the big seven German cities.
About the dynamics of real estate prices in Germany
— 2023 was an unusually difficult year for the real estate industry: passivity in financing, stagnation in transactions, further increase in construction costs, “freezing” of projects, a wave of bankruptcies of real estate companies, etc.
Real estate prices in Germany have been growing steadily in recent years — by 8-10% until the end of 2022. Since 2023, the demand for residential real estate, which was several times higher than supply, has decreased slightly due to factors such as an increase in interest rates from 1% to 4%, inflation, stricter criteria for issuing loans and changes in requirements in the energy sector of buildings. However, it cannot be said that prices have fallen significantly.
While prices in prestigious areas remain stable, starting in 2023 there has been a slight decrease in prices — on average by 10%-15% for apartments in certain areas (especially for real estate (apartments and houses) in need of repair).
Interest rates have now dropped to 3.5%. This suggests that the situation has stabilized and a further decline in residential real estate prices, especially in large cities in West Germany, should not be expected. First of all, this is due to the constant influx of the working population and the lack of land for the construction of residential buildings. Accordingly, real estate prices will rise in the long term.
Those who wish to purchase secondary real estate can count on a certain discount, however, repair costs should be taken into account here — at the moment it is about 500 euros per square meter of living space.
— How did real estate prices develop in 2023?
— According to the Federal Statistical Office, in 2023 there was the sharpest drop in German property prices in the last 23 years — in the third quarter of 2023 they fell by 10.2% compared to the previous year.
On average, houses fell in price by 12.7%, and apartments by 9.1%.
In Munich, apartment prices in the 3rd quarter of 2023 decreased by -15.25% compared to the same period last year, slightly behind Hanover (-14.02%) and Stuttgart (-13.78%).
Prices for private homes in Munich decreased by -10.84% in the 3rd quarter of 2023. This indicator is followed by Hamburg (-9.77%) and Dusseldorf (-8.55%). House prices fell the least in Dresden (-3.22%).
Hamburg, Germany
About the cost of apartments and houses in German megacities
— The cheapest accommodation can be found in Dortmund. There, real estate costs an average of 2,300 euros per square meter.
The most expensive thing is still in Munich — here you have to pay an average of 8,400 euros per square meter.
That is, for a 2‑room apartment with an area of 60 square meters, you will pay 138,000 euros in Dortmund, while in Munich an apartment of the same area will cost 504,000 euros.
Below we present the prices of residential real estate in the TOP 7 cities of Germany. The cities in Germany that are most important for the real estate industry are called the “big seven”.
Munich
Currently, the price for apartments in Munich per square meter is on average 8,400 euros, for a house — on average 8000 euros.
Frankfurt am Main
The price order in Frankfurt am Main is now as follows: when buying an apartment, the price per sq.m. is on average 5,800 euros, in the case of purchasing a house – about 5,100 euros per “square”.
Berlin
Currently, the price per square meter for apartments in Berlin is on average 5,100 euros, for a house — about 5,130 euros.
Hamburg
The cost per square meter in Hamburg currently averages 5,800 euros if you buy an apartment, about 5,000 euros if you buy a house.
Stuttgart
Currently, the price for apartments in Stuttgart per 1 sq.m. is about 4800 euros, for a house — an average of 5200 euros.
Dusseldorf
When buying an apartment in Dusseldorf, you will need to pay an average of 4,500 euros per square meter, when buying a house — about 4,600 euros per 1 sq.m.
Cologne
In Cologne, the “square” costs 4,700 euros if you buy an apartment, and 4,400 euros if you buy a house.
The location and condition of the property are crucial factors in accurately estimating the price of the property.
Top 5 cities in Germany: experienced consultants on the pros and cons of living in Berlin, Munich, Hamburg, Stuttgart and Leipzig
About location classification
— In Germany, there is a classification of the location:
To the category And the above-mentioned megacities with very high demand for real estate and very high prices belong.
Cities with location B are large cities of great national and regional importance with a population of 250 to 600 thousand people. They are usually located near the TOP 7 cities. Among them, for example, Leipzig, Nuremberg, Mannheim, Wiesbaden, Hanover and others.
Cities with a location With — these are cities with limited national, but great regional significance with a population of 100 to 250 thousand people. These include Wuppertal, Kiel, Mainz, Freiburg, Augsburg, etc.
Some experts criticize this classification, as it underestimates the unique advantages of the residential real estate markets of small and medium-sized cities.
For example, there are cities that belong to the same category, but are still difficult to compare because they are located in different regions. As we have already said, real estate in East Germany is less liquid — there is a large outflow of the working population from small towns, which cannot be said about the cities and villages of West Germany.
Frankfurt, Germany
About the purchase of real estate by foreigners
— How can a foreigner buy a property in Germany? What difficulties might arise?
— In general, the process of buying real estate in Germany is not difficult for foreigners. Foreigners are not limited in buying local real estate, both when choosing the type of property and when choosing the location. This distinguishes Germany from countries such as Austria or Switzerland, where it is necessary to obtain permission from a special land allocation commission. The main requirement in the German market is confirmation of the origin of funds.
To purchase a property in Germany, the following documents are required from the buyer:
- a copy of the identity document of the potential buyer, or a copy of an extract from the company’s trade register (in case of acquisition of the object by a legal entity);
- a certificate from the bank about the account status, which will serve as confirmation of the seriousness of your intentions in purchasing real estate and must be submitted when reserving the object.
However, citizens of Russia and Belarus now have to face great difficulties when buying real estate in Europe, in particular, in Germany. This is possible if certain conditions are met:
1) If you do not have a residence permit in Europe (Italy, Greece, Spain and others), but you have already opened an account with a European bank and there are enough funds on it to pay for the cost of real estate and acquisition costs, you can buy private or commercial real estate in Germany. The client can dispose of his money in any amount that was already in the account (if he is not included in the sanctions lists of citizens whose accounts are frozen).
2) If you have You have an EU residence permit (unlimited in time), you have the right to: transfer an unlimited amount to an account, get a loan from a German bank, invest money in shares — that is, perform any operations on an equal basis with German citizens.
3) If you have Do you have an account in a non—EU country – Turkey, Georgia and others— banks are unlikely to want to open an account for you in Germany, since careful verification of the origin of funds is too time—consuming a process that Germans are currently wary of in order to avoid risks. But if Russians and Belarusians have enough funds and a transparent history of their origin, then the probability of opening a bank account in a German bank is 50/50.
Citizens of other CIS countries (Georgia, Kazakhstan, etc.) are not limited in opening accounts and transferring money from other countries, provided that the mandatory condition is confirmation of the origin of funds. For citizens of Ukraine, there is a problem of withdrawing money from Ukrainian banks.
How to buy a property in Germany: a detailed guide
About real estate that is in high demand
— Residential real estate has always been in high demand in Germany, both for its own use and for rental. First of all, these are apartments, apartment packages, apartment buildings (depending on the budget).
Why residential? It should be understood that Germany is an economically developed country with a high standard of living and, accordingly, a high cost of real estate (we gave examples of prices above). On the one hand, residential real estate generates less income — about 3.5%, while commercial real estate generates 5-6%, but residential real estate is growing in price faster.
Another reason why investors invest in residential real estate in Germany is that objects from this category are always on the market. Yes, the number of new buildings in central areas has significantly decreased over the past 3-4 years, as there are fewer vacant lots in big cities, nevertheless, there is a certain choice of apartments, which cannot be said about commercial real estate. Sometimes our clients wait about a year for a suitable object if they plan to buy the desired type of commercial real estate in a specific location.
In addition to residential real estate, commercial real estate with long-term lease agreements with a reliable tenant is in constant demand. It can be either an office building in big cities and their suburbs, or a chain supermarket in some small German town.
As you know, in Germany, the entire infrastructure is decentralized — each village has its own shopping malls, swimming pools, educational institutions and clinics, i.e. the local population enjoys all the benefits of “civilization”.The main thing when choosing an investment property in small towns is to analyze the economic situation of the region.
In general, we can say that the new federal Lands (East Germany) are not so reliable for investment — in these regions there is an outflow of the working population, respectively, there is a risk that the building will be empty when the tenant leaves.
— In which sectors has it become popular to invest only recently?
— In recent years, social real estate (apartments and nursing homes) has been in particular demand. Germany is a country with a very developed social system, on which the state spends about 25% of GDP annually. Thus, nursing homes provide an opportunity to receive a stable guaranteed income with good growth prospects.
The social real estate investment market is currently on the rise, mainly due to demographic changes in Germany, which will persist in the country in the coming decades. Forecasts show that, despite the increase in the birth rate in Germany in recent years, the population is noticeably “aging”, which means that buying apartments or homes for the elderly is a reliable preservation of capital.
In addition, energy infrastructure, data centers and the healthcare sector are becoming key areas for future investments.
Investors are showing a growing interest in increasing their presence in these areas to meet the growing need for technologically advanced real estate solutions.
The demand for energy-efficient buildings adapted to climate change will continue to grow.
Author
Yulia Yanukovych Editor-in-Chief
I am responsible for the work of the editorial office. I write expert interviews and guides.
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