Falling demand and first price stagnation in Germany’s metropolises

These are the results of the 6th edition of the immowelt price compass for the 2nd quarter of 2022:

– Uncertain situation and rising interest rates are causing demand to decline – Germany-wide 17 percent fewer inquiries about advertised properties than in the previous year
– Strong drop in demand in Berlin (-52 percent) and Hamburg (-47 percent)
– Stagnating or slightly falling prices in 7 out of 14 major cities: Munich, Düsseldorf, Leipzig (each -1 percent) and Hanover (-2 percent) are already in the red
– Despite falling demand, Berlin exceeds the 5,000 euro mark (+2 percent)

Rapidly rising loan interest rates, high inflation rates and ongoing uncertainty due to the war in Ukraine, the corona pandemic and disrupted supply chains have had a significant impact on the residential real estate market in the second quarter of 2022. The immowelt price compass (http://ots.de/r0po2n) shows declining demand in 13 of the 14 cities surveyed. In some cases, the portfolio of properties offered for sale increased at the same time. As a result, asking prices are stagnating or already falling slightly in 7 of the 14 largest cities in Germany. In the quarterly report, existing apartments (75 square meters, 3 rooms, 1st floor, built in the 1990s) offered on immowelt.de in the 2nd quarter of 2022 were compared with the previous quarter. Demand and supply were examined using a year-on-year comparison.

The consequences of the rise in interest rates

Home loan interest rates have risen sharply since the beginning of the year and inflation remains high. One consequence of this is that many people can no longer afford the dream of owning their own four walls. As a result, the demand for condominiums has recently fallen sharply: in the second quarter of 2022, the number of inquiries about properties for sale advertised on immowelt.de fell by 17 percent compared to the previous year.

Another effect of the rise in interest rates is that the number of apartments advertised has again increased significantly. In a comparison between the second quarters of 2022 and 2021, the offer has increased by 29 percent. This is probably due to the fact that marketing is becoming more complex due to falling demand and more properties are being offered on the open market.

Demand partially halved

A look at the 14 major cities with more than 500,000 inhabitants shows that interest in real estate has declined compared to the same quarter of the previous year, particularly in markets with high prices. The supply has mostly increased: In Munich there are 18 percent fewer inquiries with 27 percent more real estate offers. In Cologne, the changes are even more pronounced: Demand has fallen by 20 percent, while the number of advertisements has risen by as much as 54 percent.

In Berlin, demand has more than halved (-52 percent), and there are also significantly fewer inquiries in Hamburg (-47 percent). However, the supply has not yet increased in either city and, contrary to the trend in the other major cities, has decreased again. In both cities, the falling demand therefore appears to be due to the persistently low supply. Distortions caused by the rent cap could also continue to have an effect in Berlin: Here the number of advertisements for residential property increased sharply during the period in which the law was in force. After the Federal Constitutional Court overturned the rent cap, the sales advertisements fell again significantly.

Quarter-on-quarter comparison: falling or stagnating prices in 7 out of 14 cities

The increased construction interest rates, the high inflation and the uncertainties caused by the war in Ukraine are not only reflected in the lower demand, but also in the purchase prices. According to the immowelt price compass, the asking prices of existing apartments in 7 of 14 major cities surveyed did not increase further in the second quarter of 2022: Prices have remained stable in 3 cities, and slight declines can already be observed in 4 other cities. In the previous quarter, all 14 cities recorded rising purchase prices.

In the last quarter in particular, the development of purchase prices lost momentum in the most expensive major German cities. With Munich, Frankfurt and Cologne, 3 of the 5 most expensive cities have stagnating or slightly falling prices. In Munich, used condominiums currently cost 9,551 euros per square meter after a decline of 1 percent. Although this is by far the highest value of all cities, a quarter ago it was still 9,626 euros. In Frankfurt (EUR 6,554) and Cologne (EUR 5,348) purchase prices have remained stable.

In Düsseldorf, which is also expensive (5,206 euros), prices are already falling by 1 percent. Most recently, prices have risen by 3 percent for two quarters in a row. The trend reversal in Hanover is even clearer (4,019 euros). After increases of 4 and 3 percent, purchase prices are now falling by 2 percent. This is the largest decline of any city.

Slight increases in Berlin and Hamburg

In Berlin, despite the reduced number of inquiries, there does not seem to be a balance between demand and supply: In the 2nd quarter there was a slight price increase of 2 percent. Berlin has thus passed the 5,000 euro mark. However, should the framework conditions continue to deteriorate, it is quite conceivable that prices per square meter will soon fall below that again. For the size and importance of the city, however, the price level is still comparatively low.

On the other hand, living space is more expensive in Hamburg (6,748 euros), where an increase of 1 percent was recorded in the second quarter. In Stuttgart, too, there has not yet been a complete reversal of the trend. The purchase prices also increase by 1 percent to 5,767 euros per square meter. In Nuremberg, Bremen, Dresden and Dortmund, the increase is somewhat stronger at 2 percent each, although prices in the latter two cities in particular are still very cheap and should still be affordable for many people despite higher interest rates.

The 6th edition of the immowelt price compass is available for download here. (http://ots.de/Lwv63w)

Calculation and methodology

The analysis is based on apartments advertised on immowelt.de, which are evaluated using proven statistical methods. These are based on the many years of expertise in price calculation of the French partner portal Meilleurs Agents. The resulting price updates give an insight into the dynamic situation on the residential real estate market in these cities. Detailed information on the methodology can be found on page 6 of the current immowelt price compass (https://content.cdn.immowelt.com/iw_group/Redaktion/Pressemitteilungen/2022/2022_07_05_immowelt_Preiskompass_Q2_2022.pdf?v=1657004536).

You can find this and other press releases from immowelt.de in our press area at presse.immowelt.de.

About real estate:

immowelt is part of the AVIV Group, one of the largest digital real estate tech companies in the world.

The immowelt mission is to digitize all steps of the real estate transaction in the future in order to make it as uncomplicated and simple as possible for everyone involved. The basis for this is provided by the wide-ranging immowelt portals, which are among the leading real estate platforms in Germany and Austria and are already successfully bringing together owners, real estate professionals and those looking for something. With data-supported services, immowelt supports the uncomplicated search for a rental apartment, the effective marketing of a property and tailor-made financing for your own four walls. Thanks to decades of experience and extensive real estate know-how, immowelt creates the perfect sense of achievement for tenants and landlords, real estate professionals, property owners and buyers.

In addition to immowelt, other leading real estate online marketplaces in France, Belgium and Israel belong to the AVIV Group, which is part of Axel Springer

Press contact:

immowelt GmbH
Northeast Park 3-5
90411 Nuremberg

Barbara Schmid
+49 (0)911/520 25-808
[email protected]

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Original content from: immowelt, transmitted by news aktuell
Original message: https://www.presseportal.de/pm/24964/5265195

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