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According to the Housing Atlas published by Postbank and the Hamburg Institute of Economics, in 96% of German regions the cost of purchasing a home in 2023 was lower than in 2022.
Germany's seven largest cities saw the biggest drops in house prices in 2023, according to the study. In Berlin, Hamburg, Munich, Cologne, Frankfurt, Düsseldorf and Leipzig, the average price decline was 12.7% compared to 2022.
Of all German cities, the largest declines occurred in Mainz and Stuttgart: respectively 16.2% and 16.0% compared to 2022. Property prices have also fallen in smaller cities and towns across the country. In fact, there were only 16 regions in Germany that did not experience a decline in property prices last year.
According to Postbank, a substantial rise in mortgage interest rates, increasing uncertainties and a slight decrease in demand are the reasons behind the drop.
In the study, Property Product Manager at Postbank Manuel Beerman pointed out that, while housing in Germany is getting cheaper, it is still unaffordable for the majority.
“After several years of particularly stark price rises, local property prices in metropolitan areas are overheating,” said Beerman, “These changes are most tangible in large, popular cities and their surroundings. However, the price of residential property, especially in greater Munich or Hamburg, was still very high in 2023 and is not always intrinsically justified.”
According to an estimate from the property portal Immowelt published in early 2023, a family of three in a German city has to earn a minimum wage of €5,000 per month before taxes to be able to afford a house or apartment of 90 square meters.
In Munich, families will have to fork out €823,590 to buy a 90 square meter property. Monthly payments of €4,255 (based on interest rates at the start of 2023) paid by a family of three with one child, where one adult works full-time and the other part-time, would turn into staggering 88% of the average household income.
Source: I am Expat
