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PROPERTY

German property prices rise at highest rate in two decades

The cost of buying a home has jumped significantly in the past year in Germany, with major cities and rural areas seeing the biggest rise in prices.

Property prices German
A row of houses in Munster, Germany. Photo: picture alliance/dpa/LBS West | LBS West

According to the latest data from the Federal Office of Statistics (Destatis), residential property prices in Germany rose by an average of 12.2 percent between the final quarter of 2020 and the final quarter of 2021. 

This is the biggest price increase in residential property prices in more than two decades.

It followed two previous quarters of strong growth, with prices springing up by 12 percent in Q3 and by 10.8 percent in Q2 compared to the previous year’s figures. From Q3 to Q4, property prices went up by just over three percent on average in Germany.

In the annual average for 2021, prices for residential property in Germany rose by 11 percent overall compared to 2020 – almost double the average growth of 7.8 percent in 2020. 

The latest statistics suggest that Germany is seeing a renewed boom in its housing market after the pandemic, which could reflect the low interest rates on mortgages and the impetus to invest savings in property to prevent them being eroded by inflation.

READ ALSO: EXPLAINED: The hidden costs of buying a house in Germany

Rural areas see highest growth

With a culture of remote working taking hold in Germany since the pandemic struck in 2020, prices in rural areas showed the strongest growth of all last year.

According to Destatis, the cost of buying a detached or semi-detached house in less populated rural regions rose by 15.9 percent against the previous year, while flat prices went up 13.2 percent. In more densely populated rural districts, prices for detached and semi-detached houses rose by 14.5 percent and prices for condominiums went up by 11.2 percent.

This trend could continue as more and more people consider swapping their urban lifestyle for a gentler pace of life in the countryside.

Average property price increases

Average annual price increases in the German property market from 2000-2021. Source: Destatis

A recent survey by property search portal ImmoScout24 revealed that two-thirds of Germans had thought about moving to the country in the past few years, with most attracted by the idea of being close to nature and being able to have their own garden. 

Since the start of the pandemic, demand for family homes out in nature has gone up by 30 percent, ImmoScout24 revealed. The demand was particularly strong in the green belt areas around Berlin and Hamburg. 

Significant price hikes in major cities

In a reflection of the fiercely competitive rental market, property prices in Germany’s seven major metropoles also rose steeply in 2021. 

Berlin, Hamburg, Munich, Cologne, Frankfurt, Stuttgart and Düsseldorf all saw above-average price increases in Q4, with prices for detached and semi-detached houses rising by 12.8 percent and prices for flats by 12.7 percent year-on-year.

A small consolation for potential big-city buyers: the price hikes in the metropoles appear to be tapering off a bit.

Between the third and fourth quarter, prices for detached and semi-detached houses in metropolitan areas rose by 1.4 percent, while flat prices rose by just 0.7 percent. This is a marked change to the rate of growth just a quarter earlier, when prices for houses jumped by 3.5 percent and prices for flats had jumped by 3.8 percent compared to Q2. 

Currently, according to property portal Immowelt, houses in Germany cost an average of around €2,800 per square metre, while flats cost an average of around €3,200 per square metre, though there are strong regional differences.

Saxony, for example, remains a highly affordable place to buy a starter home, while in Bavaria and its capital, Munich, buyers can expect some of the highest property prices in the country. 

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LIVING IN GERMANY

Living in Germany: Exploring locally, Bargeld and the NRW state election

In our weekend roundup for Germany we look at exploring the country this summer, the country's obsession with cash and some facts about North Rhine-Westphalia, which goes to the polls on Sunday.

Living in Germany: Exploring locally, Bargeld and the NRW state election

A chance to explore Germany 

Although we’re still in the pandemic, it feels like life in Germany is beginning to feel a bit more like it did before Covid hit us. With many restrictions easing, people have been really enjoying spring and looking forward to summer.  So it’s no surprise that many of you have been reading our stories about travel. Our articles on the €9 monthly ticket as well as train travel in Germany and beyond have been particularly popular. The public transport offer will also give many people the chance to explore closer to home. I know I am really looking forward to seeing more of Germany, whether it’s around the Brandenburg area near where I live, or going further afield (Heidelberg, I’m looking at you). I’d love to know if you want to use the €9 ticket or if you have any plans to explore Germany this summer. Please fill in this survey on the €9 ticket (it’s open until Monday) and get in touch with your opinions or other travel plans by emailing [email protected]. Thanks so much to those of you who’ve already been in touch.

Tweet of the week

The German love of cash or Bargeld in 2022 while the rest of the world goes contactless is indeed one of life’s greatest mysteries, as this tweet highlights. We’ll definitely be using our ‘ask a German’ series to try and find out more about this habit… 

Where is this? 

Pankstrasse U-Bahn
Photo: John MACDOUGALL / AFP

Berliners or those who’ve visited the capital may recognise this U-Bahn station which is situated in the north. The station is actually part of the Pankstrasse nuclear fallout shelter. Built in 1977 during the Cold War, this “multi-purpose” facility was intended to protect the citizens of West Berlin in case of a nuclear conflict. The bunker serves not only as an U-Bahn stop for commuters but also, in an emergency, could have sheltered 3,339 people for up to two weeks. For those interested, we’d recommend checking out a tour like those run by Berliner Untervelten E.V. Due to Vladimir Putin’s invasion of Ukraine, which has led to massive tension between Europe and Russia, the tours have become even more topical.

Did you know?

Since people in the state of North Rhine-Westphalia (NRW) or Nordrhein Westfalen are going to the polls this Sunday, we thought we’d look at some facts about this western state. This is Germany’s most populated state with about 17.9 million people. It’s also home to the most foreigners – around 2.5 million non-Germans live in NRW. With cities such as Cologne, Düsseldorf, Dortmund and Essen, the state is a culturally rich and diverse part of Germany. Many people don’t know that Bonn was the capital of the former West Germany all the way up to reunification, before Berlin took the title. Many federal buildings and institutions still have their base there. 

The state is led by Christian Democrat Hendrik Wüst who took over last year after Armin Laschet resigned as state premier following his unsuccessful federal election bid. The CDU is currently in a coalition with the Free Democrats. But it looks like change is on the horizon. The CDU and the Social Democrats are both polling at around 30 percent, with the CDU having a slight lead of two to four percentage points. Meanwhile, the FDP appears to have lost support. It’s going to be a tight race – and the Greens party – polling at around 17 percent – will likely be the kingmakers. Important topics for voters include the future of German industry, and how to secure jobs in the move to renewable energy. Many people see this election as a test for the federal government which is led by the SPD’s Olaf Scholz. 

Thanks for reading,

Rachel and Imogen @ The Local Germany 

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