The market for condominiums in major German cities lost some of its momentum in 2017. Even as selling prices continued to go up, both the number of flats sold and the revenue total declined. However, the market performance differed considerably from one region to the next, as the ACCENTRO Homeownership Report 2018 shows.

Leipzig and Dresden now Count among Germany’s Largest Housing Markets

Although Berlin remains by far the most important condominium market in the country, the number of transactions has declined for two years in a row. A setback by 7.42 percent in 2016 was followed by another 5.20 percent drop in the number of flats sold. Berlin is experiencing the same issue that plagues other German metropolises where short supply makes it harder and harder for buyers to acquire condominiums. The issue is reflected in the price growth in the national capital in 2017 which, while exceeding the average still, no longer showed the same dynamic pace as in previous years. Although prices climbed at a rate of 5.50 percent last year, that rate compares to a price growth of 16.73 percent as recently as 2016. Then again, Berlin remains the city with the steepest price hike in a ten-year comparison, with average selling prices increasing by 134.63 percent between 2007 and 2017.

The largest housing markets in the other East German states are the Saxon cities of Leipzig and Dresden. Both cities made it into the top 10 list of the fastest-selling cities in 2017. Another city in Saxony that showed a remarkable performance in 2017 was Chemnitz, where selling prices rose at an average rate of 19.74 percent. In addition, the number of transactions jumped up by 83.59 percent, the steepest increase nationwide. Similarly, the number of flats sold in Cottbus in Brandenburg surged by 76.52 percent year on year. A look at the bottom of the list, however, reveals the vast discrepancies on the East German market. Jena and Erfurt in Thuringia, for instance, are among the cities with the most drastic drops in transaction figures. The two also count among the cities that bring up the rear with the poorest price performance nationwide, having registered considerable price drops.

Massive Demand Backlog in Rhine-Main Region

The Rhine-Main metro region is on record with an extremely stable market development. Like elsewhere, the number of transactions in the cities of Frankfurt, Wiesbaden, Mainz, Darmstadt and Offenbach, admittedly went down by a total of 7.65 percent. But substantial price increases ensured that the revenue total remained the same. Between 2016 and 2017, the average selling price in these five cities gained by nearly ten percent, and it should be added that virtually all of the cities in the region—including Frankfurt, Wiesbaden, Mainz and Darmstadt—now count among the ten priciest cities in Germany. The Rhine-Main region moreover illustrates impressively how cities can benefit from their proximity to metropolises. Going against the overall trend, sales figures ascended both in Mainz (6.64 percent) and Darmstadt (8.12 percent). High prices in the metropolises—Frankfurt being the second-priciest city in Germany—clearly trigger evasive market movements into the suburbs.

Meanwhile, Munich remains the country’s most expensive city. The average selling price for a condominium here was 447,638 euros in 2017, implying a one-year growth by 6.03 percent. Price growth was also reported from other cities in Bavaria and went all the way into the double-digit range in the cases of Ingolstadt and Fürth at 12.47 percent and 11.60 percent, respectively. The number of transactions involving new-build properties declined noticeably across Germany in 2017, but nowhere more so than in Bavaria. Specifically, the number of new-build flats sold decreased by 27.18 percent in Munich, and by an actual 47.63 percent in Regensburg. Two-digit dips were also registered in Würzburg, Erlangen, Ingolstadt and Augsburg. This makes it safe to predict that the housing market and the price trend in Bavarian cities will remain strained.