The German real estate market has been on an upward trajectory for years, with prices in major cities reaching unprecedented heights. While some experts are beginning to use the term “real estate bubble,” a new study sheds light on what we can expect in the coming years. The study, titled WohnBarometer, examines the price dynamics of single-family homes and condominiums, providing insight into what buyers can expect in 2022.
According to the study, demand for existing condominiums will continue to drive up prices, with an expected increase of 11.3% in the next twelve months. New construction is also expected to see a rise of 9.1%. Single-family homes are predicted to see a more modest increase of 7.7% for existing homes and 7.5% for new construction. While some regions may not see the same level of growth, major cities have been at the forefront of the market’s surge. However, experts predict that the rate of price growth in these areas will slow down in the future.
The study predicts that Frankfurt will see the lowest increase in prices for existing condominiums, with a projected rise of 5.2%. Meanwhile, Berlin is expected to see a 13.1% increase in prices for existing condominiums and a 12.8% increase for new construction. Hamburg is predicted to have the highest prices for new construction, with an expected increase of 7.1%. The study also notes that the cost of construction has risen significantly in recent years, with materials and labor costs increasing by as much as 14.8%.
While the trend of rising home prices has slowed down slightly in the third quarter of 2021, experts warn that buyers should act quickly if they find their dream home. With low interest rates, it may be possible to secure full financing for a home purchase, but banks recommend having at least 20-30% of the purchase price in equity. Despite the current inflation rate, experts do not predict a significant downturn in the German real estate market in the near future.
