Real estate: How prices are developing in cities

March 15, 2021 – Deutsche Bank is forecasting an end to the boom for concrete gold in 2024. In a current report, however, the financial institution differentiates between developments for eleven large cities and their respective surrounding areas. Demand will continue to rise in Berlin and Leipzig, while the situation will ease in Hamburg, Bremen and Munich.

The research department of Deutsche Bank AG ventures into the new “Germany Monitor” Outlook for the German housing market (PDF, 4.2 MB). The core thesis of the analysis is that the nationwide price cycle for real estate will come to an end in 2024.

The lack of offers on the property market in this country will decrease in the next three years. Responsible for this are the declining immigration in the corona years 2020 and 2021 with constant construction activity, which leads to a relaxation of offers and inquiries (VersicherungsJournal 9.3.2021).

Assessment for eleven large cities and regions

The Germany Monitor provides a forecast for eleven large cities and the respective regions. It covers Berlin, Bremen, Düsseldorf / Cologne, Frankfurt am Main, Hamburg, Hanover, Heidelberg, Leipzig, Munich, Nuremberg and Stuttgart.

The analyzes for the metropolitan areas are differentiated. According to economist Jochen Möbert from Deutsche Bank, this depends, among other things, on the development of the business location and the number of residents (residents moving in and out) as well as the resulting supply situation on the respective housing market.

Early price freeze in the northwest

The author of the report expects a relatively early price freeze or an end to the real estate boom, for example in the north-west of the republic for the Hanseatic cities of Bremen and Hamburg. Here the supply situation relaxes earlier.

“Due to the relatively moderate population growth and supply-oriented housing policy, the Hamburg cycle is likely to end earlier than in other metropolises. For Bremen and in particular the north-west metropolitan region, the fundamental supply shortage is also relatively low, ”says the Deutschland-Monitor.

Berlin is becoming a global metropolis and pulling the surrounding area with it

In contrast, Deutsche Bank is forecasting a clear upward trend for the metropolitan regions of Berlin / Brandenburg and Central Germany. The financial institution cites the following point as the reason: “We see […] Berlin on the way to becoming a global metropolis. “

According to the report, the capital’s economy is likely to grow vigorously over the years. The city has also developed “from a subsidy stronghold to a first-class European location”. “This change should increase the population to over four million and, together with the higher economic power, stimulate the demand for housing,” says Möbert.

The economist is transferring this development to the Berlin area in Brandenburg, Leipzig and the metropolitan region of Central Germany: “Accordingly, we expect the end of the cycle there relatively late. Leipzig is also likely to be the metropolis in Germany that benefits most from the regional influx. “

After evaluations of “Immoscout24.de“, A brand of Immobilien Scout GmbH, Leipzig is currently recording the greatest price increase for new buildings (February 25, 2021). The competitor too Immowelt AG sees the Saxony metropolis with price increases of 17 percent from 2019 to 2020 for new apartments and 19 percent for existing apartments among the top cities (5.2.2021).

Munich: end of the price boom in sight

Möbert also predicts that the price spiral will end earlier than 2024 for Munich. The reason: “The absolute and relative price ratings are now so high that further price increases would make Munich the most expensive European city.”

Therefore, the city is gradually losing its attraction for investors. “The Munich cycle and the nationwide cycle may end at the same time in 2024,” said the economist. The end of the cycle in the Bavarian capital could also have an impact on the metropolitan areas of Stuttgart and Nuremberg, according to the money house’s forecast.

Inventory and trends 2021

Forecasts for the German real estate market, also with regard to the effects of the ongoing pandemic, which will extend into the near future, are few and far between. Most experts look at past developments in demand, offers and prices.

The presented an up-to-date inventory Postbank – a branch of Deutsche Bank AG with their “Residential Atlas 2021”. On a nationwide average, existing properties increased in value by 9.6 percent in 2020 (March 10, 2021).

The hamburger F + B research and advice for living, real estate and the environment GmbH derived trends for the German housing market from their evaluations. The prices for single and two-family houses are rising more significantly than the costs for condominiums, a development that the experts attribute to the pandemic (February 12, 2021).

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