Condominium Prices Set New Records despite COVID-19
Germany’s real estate market proved decidedly robust during the coronavirus crisis year of 2020. Selling prices for condominiums surged noticeably in 75 out of 81 major German cities last year – in some instances by more than 30 percent. This is the gist of an analysis that the Immowelt real estate portal conducted, examining flats between 40 and 120 square metres in cities of 100,000 or more residents. “In contradistinction to other financial investments, the coronavirus pandemic has revealed that the real estate market is crisis-proof and that prices are not softening,” said Prof. Dr. Cai-Nicolas Ziegler, the CEO of Immowelt. He went on to say that the persistently strong demand for housing had prompted “sometimes hefty price hikes” even in 2020.1
At 4,640 euros, the square metre price in Berlin increased by around eleven percent year on year in 2020. The consequences of the brisk price growth in the German capital were most keenly felt in nearby Potsdam: Here, condominium prices jumped up 26 percent last year. In fact, they nearly closed in on Berlin with a square-metre price of 4,520 euros.
Brexit Fuels Housing Demand in Frankfurt am Main
In Frankfurt am Main, square-metre price climbed almost as rapidly as in Potsdam in 2020: Germany’s financial metropolis reported a price growth by 22 percent, up to 5,980 euros – meaning c. 100 euros more than in 2019. The background to this is, on the one hand, the large number of new-build flats on the market and, on the other hand, the relentlessly strong demand on Frankfurt’s housing market. In fact, the inflow of jobs in the wake of Brexit, especially in the financial sector, delivered a further boost to demand.
Condominium buyers in Hamburg also had to dig deeper into their pockets in 2020. Although the price growth of 14 percent was slower than in Frankfurt, the absolute square-metre price of 5,270 euros set a new high-water mark in Germany’s biggest port city. This puts Frankfurt and Hamburg well ahead of Berlin on the list of most expensive cities.
Once again, Munich claimed the top spot as Germany’s priciest metropolis with ease. Here, in the Bavarian state capital, condominium buyers paid an average of 8,150 euros per square metre, which implies an eight-percent increase over prior year.
Another city where condominiums showed higher price tags than in Berlin in 2020 was Freiburg with square metre prices of 4,980 euros after a nine-percent rise. Prices in Stuttgart, state capital of Baden-Württemberg, were slightly lower at 4,800 euros, having gone up eleven percent. The price level was high even in the smaller cities of Bavaria and Baden-Württemberg last year, topping 4,000 euros per square metre.
High Growth Rates in the Ruhr and in East Germany
By contrast, price levels in East Germany and in the Ruhr are considerably lower, which made the most recent price hikes all the more drastic. An increase by 36 percent in Herne not only put the city in the lead of the catch-up rally of property prices in North Rhine-Westphalia but also made it the top-performer nationwide in terms of growth. That said, the local median prices are only c. 1,540 euros per square metre.
Even property prices in East Germany were slightly higher in 2020 than those in the Ruhr. For the metropolises of Dresden and Leipzig in particular, 2020 was another year of robust price growth, despite the pandemic. The square-metre price rose to 2,500 euros (+21 percent) in Leipzig, and to 2,610 euros (+18 percent) in Dresden. At around 27 percent, the price growth was even faster in Halle an der Saale where the square metre eventually sold for 2,240 euros – the probable reason being a catch-up effect triggered by the higher price level in neighbouring Leipzig.