Germany’s housing market continues its upward trajectory, defying earlier predictions of stabilization, according to a new report released this week. The Empirica Regio Immobilienpreisindex, compiled from data across 400 German districts and analyzed by the Handelsblatt, reveals that new-build property prices have risen for a sustained period, impacting both the rental and purchase sectors.
The index indicates that new-build apartments now average €5,166 per square meter, a 3.4% increase compared to the same period last year. This trend extends to detached and semi-detached houses, with prices rising in six out of ten districts. However, the most significant surge is occurring in the rental market, where newly constructed apartments command 4.9% higher offers than a year prior.
Experts attribute this escalating trend to a complex interplay of factors, but a particularly salient driver appears to be rising rental costs. Professor Tobias Just, a leading expert in real estate economics at the University of Regensburg, suggests that the rising cost of renting is directly motivating more individuals to explore homeownership as a potentially more attractive long-term investment. “The housing markets are in a phase of strengthening” Just stated, highlighting the increased appeal of purchasing due to rental price volatility.
While Reiner Braun, Managing Director of Empirica Regio, acknowledges the overall upward trend, he cautiously suggests a potential slowing down of price increases in the coming months, predicting “only slight increases” in average new-build property prices. However, the continued price appreciation remains a concern for affordability, particularly amongst younger demographics.
The data further underscores the widening urban-rural divide. Braun points to an accelerating trend of young people migrating from rural areas towards cities, contributing to inflated property values and exacerbating housing shortages in urban centers. The index’s compilation, based on listings from over 100 platforms including major portals like Immoscout24, Immowelt and Immonet, paints a comprehensive picture of a market struggling to meet demand and, consequently, increasingly challenging for first-time buyers and renters alike. The divergence in pricing reflects deeper socioeconomic shifts within Germany, raising questions about equitable access to housing and potential remedies for regional imbalances.