Analysis: Why German Real Estate is Not Excessive Everywhere

Analysis: Why German Real Estate is Not Excessive Everywhere

Germany is generally not as the "land of the homeowner", property ratios are also historically rather low. But for years, a trend is emerging, fed by a period of low interest rates and government incentives for builders. Promotional banks such as KfW and municipal institutes have specialized in energy efficiency houses and the modernization of old buildings. And since building land is mostly lacking in sufficient quantities in the cities, old buildings give way to new buildings aimed at single and couple households. Due to state regulations, the costs for this are about 25 percent higher than at the beginning of the millennium. But by no means all cities or regions benefit, there are some serious differences.

& quot; Second Row & ldquo; moves into focus

Due to the lack of alternatives, more and more solvent developers and project developers are moving into the second and third tier of major cities. Central cities also benefit, especially in rural areas. You are assuming an important function for the region. And they provide the jobs that incentivize trans-regional migration in the first place. Particularly in demand are small and medium-sized university cities. Due to the brisk influx, a certain level of demand remains, marketing times are much lower than the national average. And as the target group of students tends to seek a more urban environment, this also affects rental rates. Even rooms in shared apartments sometimes cost more than typical 2½-room apartments in the outskirts of large cities.

To assess whether apartments or houses are more expensive & ldquo; or yet & quot; cheap & quot; you have to compare some hard features. The easiest way is by putting the annual rental income in relation to the purchase price. Generally, from a & quot; price bubble & quot; spoken if the purchase price exceeds this value by 25 times. In Dusseldorf, Frankfurt am Main, Hamburg, Munich or Stuttgart, there are clear signs of a overheated real estate market. According to a recent study by Empirica, which, for example, puts the average income in relation to the purchase price, other regions are also affected. 73 out of 402 districts show values ​​according to which the purchase price level is so high that an investment hardly pays off. The absolute leader is Munich. Here, you have to pay on average 32 times the annual rental income as a purchase price.

Price increases are the exception, not the rule

Despite these values, you should not assume that your money can not be used conservatively and profitably. In fact, price rises are only recorded in about 40 percent of the districts. Elsewhere, the market is stagnating or dwindling, as in the eastern states outside the major cities. Even in the cities, which had recently double-digit growth rates, the arrow does not show consistently upwards. In Hamburg or Frankfurt am Main there are neighborhoods and neighborhoods where prices are falling. Affected here are peripheral areas or heavily industrialized urban areas in which little is built and the condition of the houses is also lower. Only in Berlin is there a trend that penetrates all areas of the city.

Despite the brisk construction activity, the demand for apartments can not be met everywhere. In some parts of the country, it is already apparent that growth rates are shrinking and rent levels level off.

Here are the house prices still "ok"

How much house you can afford can be compared regionally in terms of the average annual net income. For example, the Institut für Demoskopie Allensbach has determined on behalf of the Sparda banks, what is the factor when buying a detached house in the largest cities in the country. In Frankfurt am Main you have to spend about eight times your annual net income, in Munich, the value is more than nine times. The absolute values ​​also show how big the differences actually are. While an average of just under EUR 400,000 is being invested in Frankfurt am Main, such real estate in Munich is changing its owner for an average of around EUR 680,000.

Bremen is particularly favorable here, with a factor of 4.3 and an average purchase price of around EUR 205,000. Similarly, the ownership rate of over 40 percent is higher than average here. The districts of Rhön-Grabfeld in Lower Franconia (Bavaria) and Günzburg in Swabia (Bavaria) show an attractive living environment and are even below the factor 4. But this comparison alone says little about whether the investment as an investment is actually worthwhile. Because higher property quotas at the same time the demand for housing falls, correspondingly little is being built. These are, therefore, orientations where there is indeed a favorable environment for captive use.

High returns can be achieved where it attracts young and mobile people. In cities with universities and a broad labor market, staff turnover is higher, whole quarters have changed and are in demand.


Despite a period of low interest rates, entry into oversaturated real estate markets is only possible for those who are correspondingly liquid. But in absolute terms you will find here only a small part of the housing offer. In the broad masses benefit the municipalities and cities in the immediate vicinity of major cities. Cities like Regensburg, Darmstadt or Nuremberg are attractive in this regard. Population development has all the characteristics that are essential for steady growth. The higher the proportion of young people, the higher the potential for development.


High growth rates in purchase prices for houses and apartments are a unique selling point of the popular metropolises. However, in most of the other cities and municipalities, mainly stagnation or sometimes significant impairment. The more diverse the population development is, the more stable are the purchase price levels in the regions. The well-connected peripheral locations as well as the middle centers in the countryside, where supply and demand for free construction areas are balanced, offer potential.

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