:watermark(assets.rndtech.de/lvz/watermark-plus.svg,50,50,0)/cloudfront-eu-central-1.images.arcpublishing.com/madsack/TB3UJFISOMCTFS3L7NGBZVHAN4.jpg?fit=%2C&ssl=1 "Houses and condominiums – what differentiates Leipzig from Munich")
Leipzig.For a long time, home ownership and building in the east were considered to be significantly cheaper than in western Germany. But in recent years, prices have largely leveled out – at least in most of the big cities in Central Germany. The cities have developed dynamically and enjoy great popularity. The smaller medium-sized centers also benefit greatly from this, as they are a sought-after alternative to the prosperous city.
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Anyone looking to buy a detached single-family house in Leipzig today has to expect an average price of 395,000 euros, compared to 280,000 euros in 2018. In Halle, 300,000 euros are due – 50,000 euros more than four years ago – and in Magdeburg 380,000 (230,000). Compared to other major cities in central Germany, Chemnitz has the lowest prices for a single-family home of average quality. Here, too, the average price climbed by EUR 70,000 to EUR 260,000.
It is most expensive in Dresden at 500,000 euros. A sharp jump compared to 370,000 euros in 2018. This emerges from the real estate price index of the German Real Estate Association (IVD) for the Middle-East region. This means that you are at prices such as those in Nuremberg (488,000), Wiesbaden (520,000), Braunschweig (340,000) or Berlin (450,000 euros) – but are far removed from prices in Frankfurt am Main (760,000), Stuttgart (810,000) or even Munich (1.32 million euros).
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Demand for home ownership exceeds supply
“The desire for one’s own four walls is still high in central Germany,” says Robert Vesely, regional chairman of IVD Mitte-Ost. In recent years, the demand for home ownership has been significantly higher than the supply, which has led to price increases. Buying a property is often cheaper than renting it. Demand was so high because real incomes in the East have risen and loans were cheap. In addition, real estate is a tried and tested means of old-age provision – a Forsa survey commissioned by the IVD showed that over 70 percent of tenants would like to own their own home. In Saxony, the real estate transfer tax of 3.5% is still cheap compared to the rest of the republic.
However, there is currently uncertainty. According to the IVD, rising building material costs, a shortage of skilled workers and interest rate increases will lead to a sideways movement of prices in most segments. “In the long term, demand will drop somewhat. Especially for young families, the cost increases will shatter the dream of owning a home. The high purchasing power and willingness to buy in recent years are therefore likely to be declining.”
Prices are closely linked to economic development
However, there will not be a lack of potential buyers. “Because real estate price developments are also closely linked to the economic development of a region,” says broker Vesely. “The development in both countries is very good here. In addition, settlements such as those of Intel, Amazon and others contribute to the fact that the locations continue to gain in attractiveness.”
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Rural areas will continue to benefit from the current development. “Since Corona, we have seen an influx into regions outside of the metropolitan areas in Saxony and Saxony-Anhalt,” continues the IVD expert. “Especially in regions where the transport and digital infrastructure is well developed, a significant increase in demand can be felt.”
Building land outside of the big cities is significantly cheaper
While building plots in cities such as Dresden, Halle or Magdeburg can hardly be afforded, especially for young families, the situation is often very different in rural areas, according to the IVD. The square meter price for building land in Dresden and Leipzig is 500 and 350 euros. In Aue, on the other hand, 50 euros are called up, in Oschatz 66 euros, in Torgau 70 euros and in Delitzsch 150 euros. “The proximity to the big city and good transport connections have a strong influence on prices,” says Vesely. “If politicians want to promote the positive trend towards home ownership, they have to invest in local transport and broadband expansion, and young families should also be exempt from property tax when they first buy a property they use themselves.”
Sought-after residential areas outside of the big cities in Saxony-Anhalt are Wernigerode and Quedlinburg in the Harz Mountains, Stendal in the north and Lutherstadt Wittenberg in the east of the state. In Saxony around Leipzig, the lake landscapes attract prospective buyers. Beucha, Zwenkau, Markranstädt, Brandis and Machern are popular. This also applies to the area around Dresden. “In general, one can say that popularity increases the greener a region is, the more leisure activities there are, where there are good shopping facilities and the Internet, and where the transport infrastructure is right.”
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This also changes the requirements for future living space. “The study is becoming a pre-condition for a new apartment or a new home. The same applies to a stable and, above all, high-performance Internet connection. As a result of these changes, there will be a higher need for modernization in the existing building in addition to the legal requirements in new construction and renovation,” says the broker.
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