Munich real estate market: Sustained high demand
The low level of construction activity coupled with an ever scarcer supply of space in Munich led to significant increases in rents and prices in all segments of the Munich residential market, while interest rates remained low. Prices for owner-occupied apartments rose much more sharply than residential rents.
2019 Market Progress:
- So far in 2019, the residential property market in Munich has continued to be characterised by a shortage of supply, low interest rates, strong immigration and persistently high demand coupled with too little construction activity in the city.
- As a result, despite the fact that the turnaround in interest rates has already begun, a continued positive - albeit presumably somewhat slowed - development in value can be derived for the Munich residential market. RIEDEL's marketing figures in the first two months of 2019 confirm this expectation.
- There are currently no signs of a decline in demand or massive increases in supply on the Munich residential property market. In particular, despite an increase in the debt ratio to around 70% (source: Interhyp), a great deal of equity is still being invested in property purchases compared with so-called "property bubbles" in other countries.
- Both the continuing high demand for owner-occupied property and the great interest of investors in residential property, who are also active in the market, speak for a continuation of the price increases.
- Last but not least, the high capacity utilisation of construction companies is likely to further exacerbate the tight price situation in cities with strong demand, such as Munich. Since 2015, construction costs have risen by 30%.
Price development of condominiums:
- The average price paid for new-build condominiums in Munich in 2017 was around €11,600/m², with a peak of just under €18,000/m². For existing housing, average purchase prices were €10,590/m², with a peak of around €16,400/m². Over the last five years, prices have risen by +63% for new-build condominiums and +52% for existing apartments.
- In 2017, an average of €12,680/m² of living space was paid for houses with upmarket fittings in Munich. The average total price was accordingly €3.4 million for a house in the upmarket segment. The average of the top 5 % of the brokered houses was € 6.8 million. The highest individual price was just under 20 million euros. Just five years ago, the average price was 2.5 million euros with a peak of 3.7 million euros. This represents an increase of +37 % on average and +81 % at the peak.
Questions & Advice:
If you have any further questions about the current market situation or would like a free, no-obligation valuation of your property, we would be delighted to hear from you!
