Engel & Völkers Intelligence


Market Report for Residential Property in Germany

In its latest “Market Report for Residential Property in Germany”, Engel & Völkers examines market and price developments in 71 selected towns and cities, as well as the transaction volume in 2020. The market for residential property in Germany has remained largely unaffected by the impact of the pandemic, and there continues to be a clear surplus in demand countered by an extremely limited supply of property listings. As a result, asking prices for detached and semi-detached houses rose by 12.9 percent on average in the first half-year of 2021 compared to the previous year. The strongest growth was witnessed in the segment for freehold apartments, with an increase of 15.1 percent. The average asking price at a national level was 3,784 euros per square metre in the first half-year of 2021. “The strong demand for homes in recent years can be attributed to population growth and the ongoing influx of people to metropolitan regions and medium-sized towns and cities. New construction has intensified, but has not been able to meet the increased need for real estate. And, with that in mind, we anticipate that prices for properties for sale and rent will continue to rise in the second half of the year,” says Kai Enders, Member of the Management Board of Engel & Völkers AG, adding: “With the volatile stock markets and lack of investment alternatives in mind, along with the low interest rate and rising inflation, buyers will continue to opt for investments in crisis-proof real estate.” In the period from 2016 to 2021, asking prices for freehold apartments increased by 62.4 percent. This appreciation in value is also a clear reflection of the popularity of residential property in Germany as a capital investment.

Demand for residential property in Germany remains high

In the segment for freehold apartments, prices rose across the board in all 71 towns and cities surveyed. The highest prices can be found in Germany’s major urban centres. In the top 7 cities, asking prices increased by an average of 13.7 percent. Düsseldorf witnessed the sharpest price rise over the previous year (+18.8 percent), followed by Hamburg (+17.4 percent) and Cologne (+16.1 percent). With an average of 9,429 euros per square metre in the first half-year of 2021, the Bavarian capital Munich continues to lead the ranking of all towns and cities surveyed, followed by Frankfurt at 6,532 euros per square metre and Hamburg at 6,256 euros per square metre. Prices have risen significantly since 2016 in all 71 locations. In the north German city of Lübeck, asking prices have even so much as doubled in the last five years (+100%).

Significant price rises in smaller towns

In the market segment of detached and semi-detached houses, Munich ranks as the highest priced city with an average asking price of 1.21 million euros, followed by the district town of Bad Homburg at 1.17 million euros and Constance at 820,000 euros. The sharpest price rises in percentage terms were witnessed for the most part in the federal state of North Rhine-Westphalia. In the cities of Gelsenkirchen, Solingen, Recklinghausen, Bonn and Wuppertal, asking prices increased by over 20 percent in 2021 compared to the same period in the previous year. “The pandemic has prompted people in this country to place more importance on the quality of their home life. Many are now realising just what a difference a pleasant and safe home can make. The level of demand for real estate, which was already high, has risen considerably – both in city centres and in the suburbs. Regions in the vicinity of major cities often offer good infrastructure, convenient proximity to urban life, a high quality of living, and attractive properties at comparatively low prices per square metre,” says Kai Enders.

Property in areas surrounding metropolitan regions popular

The Covid-19 pandemic has meant that many new residential construction projects have experienced delays and increased costs recently. It remains the case that the completion of newly built real estate cannot match the level of demand in many cities. Engel & Völkers therefore anticipates an ongoing surplus in demand, fostering increasing real estate prices over the coming years. The highest rise in prices is forecast for metropolitan areas where buyer interest is currently particularly strong. “There is high demand in these locations, especially among families and professionals with flexible employment terms. With the option of working from home becoming increasingly common and widespread, buyers are extending their geographical search radius – and growing numbers of people are expressing an interest in houses and freehold apartments in surrounding regions. Prices in such areas are still relatively moderate compared to the big cities, and thus offer a great deal of potential for development,” Kai Enders predicts. At the same time, houses and apartments directly in urban centres will also remain very attractive to buyers and investors due to the high quality of life and excellent infrastructure they offer. Features such as a separate study for use as a home office, a balcony or a garden are particularly important.

Transaction volume in 2020: Trading continues despite Covid

The demand for detached and semi-detached properties has risen sharply since the outbreak of the pandemic in March 2020. Transaction figures for houses and apartments reached a new record high in 2020, with a total of 163.3 billion euros being turned over last year (+9.6 percent compared to 2019) and approximately 598,000 properties being sold. In the turnover ranking for detached and semi-detached properties, Hamburg once again emerged as the frontrunner with a transaction volume of 2.21 billion euros, followed by Munich at 1.79 billion euros and Berlin at 1.66 billion euros. The overall transaction volume in this segment rose by 12.5 percent over the previous year, reaching a new record value of 83.8 billion euros. In the market for freehold apartments, Germany’s capital Berlin once again leads the turnover ranking with a transaction volume of 6.21 billion euros. Munich comes in second place at 5.71 billion euros, ahead of Hamburg at 3.20 billion euros. Overall, the transaction volume increased by 6.7 percent to 79.5 billion euros, compared to 2019.