Where living space is expensive and where it is still cheap

March 10, 2021 – On a nationwide average, existing properties increased by 9.6 percent in value in 2020. But not only in the big cities had buyers to pay more, the surrounding areas of the metropolitan areas became more expensive. This applies to regions in the west as well as in the east, as an evaluation by Postbank shows.

In the corona year 2020, prices on the German real estate market continued to rise. In more than 94 percent of all German districts and urban districts, buyers for residential properties would have to dig deeper into their pockets. On average across all regions, the increase for existing properties compared to 2019, adjusted for inflation, was 9.6 percent.

This is the result of an analysis of Postbank – a branch of Deutsche Bank AG, published in the “Wohnatlas 2021”.

The evaluation is an annual, multi-part series of studies that examines the German real estate market under various aspects regionally down to district level. The current evaluation was carried out on behalf of the financial institution by the Hamburgisches Weltwirtschaftsinstitut gGmbH (HWWI) created for 401 urban and rural districts.

Corona increases the desire for your own four walls

Postbank describes the “low interest rates, high demand and scarce supply” as determining factors on the German housing market. Even the pandemic could not change that in the past year.

“Corona and the experience of the lockdown have intensified many people’s desire to own their own home. In 2020, people spent a lot of time at home due to the Corona. So it makes sense to think about your own four walls – and to consider improvements, ”says Eva Grunwald, Head of Real Estate at Postbank.

In its “residential atlas”, the financial institute analyzes the respective development for certain segments of the real estate market in the corresponding previous year (VersicherungsJournal July 28, 2020, June 24, 2020, April 7, 2020). In September, however, the Deutsche Bank subsidiary dared to look ahead to the development from 2019 to 2030 (September 16, 2020).

The surrounding areas of large cities are becoming more attractive

Existing properties in the seven largest metropolises in Germany (Munich, Frankfurt am Main, Hamburg, Berlin, Stuttgart, Düsseldorf, Cologne) were particularly high-priced last year. But according to Postbank, prices also continued to rise in the respective bacon belts, the surrounding area and the North Frisian Islands.

The analysis cites Berlin and the surrounding area as a good example of the development of the regions around the major cities. Many capital city dwellers are drawn to rural regions with the desire for a new home with more space and their own garden. In all eight districts bordering the capital, purchase prices rose by double digits, according to the residential atlas.

The greatest increase in costs was in the Potsdam-Mittelmark district, with an increase of around 25 percent; in the Oberhavel district it was just under 23 percent.

For comparison: the prices in Berlin reached an average of almost 5,000 euros per square meter, while the range in the surrounding districts in 2020 ranges from a good 3,327 euros in Potsdam-Mittelmark to 2,347 euros in Märkisch-Oderland. A purchase in Potsdam costs interested parties 4,085 euros per square meter.

Prices per square meter from 4,000 euros are expensive

The high prices in Germany’s largest cities would meanwhile also draw the attention of those interested in buying to regions away from the metropolitan areas. The residential atlas identifies Dessau in Saxony-Anhalt as the cheapest independent city with 1,046 euros per square meter.

The ten most expensive cities include the Big Seven (with the exception of Cologne) as well as Freiburg im Breisgau, Rosenheim, Regensburg and Heidelberg. All of the above have prices per square meter above the 4,000 euro mark.

“With fewer than 100,000 inhabitants, Rosenheim is the only so-called medium-sized town among the top ten. The reason is probably that the city is in the middle of a popular holiday region, ”write the authors of the residential atlas.

Development of purchase prices. To enlarge picture
click. (Image: Postbank)

Price increase in rather cheap cities

In general, according to an evaluation by Postbank, residential properties have increased in value in all major cities with more than 100,000 inhabitants, the average price increase put the money house at around nine percent.

Prices rose the most in Mönchengladbach, Kaiserslautern and Halle (Saale). The year-on-year increase was more than 19 percent. Almost as strong increases in value can be seen in Herne. In Bremerhaven and Krefeld the price increase is 16.5 percent each.

“So far, comparatively cheap cities are catching up here: On average across all major cities, the square meter in 2020 cost a good 3,000 euros. Cities with much lower price levels are now experiencing the strongest price increases, ”says Grunwald from Postbank.

Costs for houses are rising more clearly

The Postbank parent’s research department, Deutsche Bank AG, dared an outlook for the German housing market in the new “Germany Monitor”. The core thesis of the analysis is that the nationwide price cycle in 2024 and thus the nationwide real estate boom will come to an end (9 March 2021).

The hamburger F + B research and advice for living, real estate and the environment GmbH has already derived specific trends from their evaluations. The prices for single- and two-family houses continue to rise more significantly than the cost of condominiums, a development that experts attribute to the pandemic. In contrast, rents for newly rented properties are falling (February 12, 2021).

New buildings are the most expensive in Frankfurt, Stuttgart and Munich. Leipzig recorded the greatest price increase for new properties. The cheapest are the own four walls for buyers in Bremen, Dresden and still in Leipzig. This is shown by evaluations of “Immoscout24.de“, A brand of Immobilien Scout GmbH for new apartments and houses (25.2.2021).

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