Real Estate

Housing prices continue to rise faster than rents

Housing prices in Germany continue to rise faster than rents. There is a tendency towards overheating, especially in major German cities.

Despite the corona crisis, the prices for condominiums in many German cities have continued to rise. The purchase of an apartment cost an average of 25.7 annual net rents last year – in 2019 the value was still 24, as Postbank reported on Wednesday from its “Housing Atlas”.

The so-called multiplier, which shows the relationship between purchase and rental price, shows “overheating tendencies” in major German cities.

Purchase prices grew particularly strongly in relation to rents in Berlin, where almost 40 annual rents were due for the purchase of an apartment. For the first time, the capital achieved the top ranking among Germany’s seven major cities.

The development is also due to the temporary rent cap in the city, which has caused rents to fall, the authors write. In the other major German cities such as Hamburg and Munich, the purchase prices also lagged behind the rent level.

The real estate boom is set to continue

“Higher multipliers can indicate that the regional market is overheating,” said Postbank real estate expert Eva Grunwald. The dynamism is unbroken: in the past few years, apartments have already cost an annual rent more, now prices have climbed even more drastically.

No surprise for Grunwald: “With regard to the real estate boom of recent years due to the corona pandemic, we do not expect any trend reversal.”

It is therefore advisable to take a look at the surroundings of the large cities, where the multiplier is sometimes at a moderate level. Buying an apartment in medium-sized cities such as Bremerhaven, Salzgitter or Bochum was also comparatively cheap.

In the district of North Friesland, on the other hand, which also includes the coveted North Sea locations on Sylt, Föhr and Amrum, the multiplier was 75 – nationwide top value. At the bottom is the district of Mansfeld-Südharz in Saxony-Anhalt with twelve annual net rents as the purchase price.

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