15th ACCENTRO Home Ownership Report

Revenues from residential sales in Germany's 80 largest cities rose by 19.4 percent in 2021 to a record level of almost 43 billion euros. The total sales of owned apartments grew by 4.4 percent to 127,967 apartments. This is the result of the 15th ACCENTRO Home Ownership Report. In Germany's eight largest cities (Berlin, Hamburg, Munich, Düsseldorf, Cologne, Stuttgart, Frankfurt am Main and Leipzig), 55,939 apartments were sold, marking an increase of 9.63 percent. Despite the continued high demand for residential space, the lack of supply and insufficient completion figures, catch-up effects were observed in the number of transactions in 2021, particularly in the top eight cities. Berlin stands out here, with the 19,784 residential sales reported in the capital accounting for more than 15 percent of all transactions. Munich follows in second place with 10,965 sales and Hamburg makes it to third place with 6,241. It is striking that Leipzig and Dresden (5,481 and 4,071 units sold respectively), two eastern German metropolises, complete the top 5 cities.

Real estate in eastern Germany is particularly popular with buyers. Leipzig takes the top spot with 9.1 apartments sold per 1,000 inhabitants. Chemnitz slipped to second place with an unchanged figure of 8.6 apartments per 1,000 inhabitants. Berlin, meanwhile, recorded a very large number of transactions and a year-on-year increase of 20 percent. In terms of sales, this growth is reflected in 8.3 billion euros (up 157 percent).

A total of 25,274 new homes were sold in 2021, most of them in Berlin (3,796), Munich (3,045) and Hamburg (1,574). Overall, the number of apartments sold in the 80 major cities surveyed rose by 2.5 percent. The top 8 cities were able to increase their sales figures in the new-build segment, in some cases by double-digit percentages.

The comeback of housing-savings

With the end of the European Central Bank's zero and minus interest rate policy, housing-savings could be making a comeback. The once popular financing product for buying a property is once again in demand since construction interest rates are rising again and interested parties are looking for alternatives. According to a report in the German business newspaper Handelsblatt, most home savings loans are currently cheaper than standard bank loans. And customers can secure interest rates for up to 15 years through home savings.

In concrete terms, this means that the interest rate for a classic building loan with a 15-year term is currently around 3.4 percent. If real estate buyers want to secure the interest until the loan is paid off, the figure rises to up to four percent. With building societies, loan interest rates start at less than one percent, and even the more expensive providers are no more than 2.35 to 2.5 percent.

Construction ministers stick to 400,000-home target

Despite all the crises, the federal and state governments are sticking to their target of 400,000 new homes per year, 100,000 of which are to be social housing. To ensure that this target remains achievable, the 140th Conference of Construction Ministers, which took place in Stuttgart at the end of September, called for reliable and stimulating government framework conditions for housing construction.

Nicole Razavi (CDU), Baden-Württemberg's Minister for State Development and Housing and chair of the 2022 and 2023 conference, warned of a dramatic situation in housing construction. In a statement, the construction ministers of the federal states criticized the "unclear federal policy funding framework" and energy requirements in the residential building segment - even though housing is still urgently needed in all federal states. Participants at the Construction Ministers' Conference also unanimously spoke out in favor of easing regulations for solar installations on roofs.

Property tax causes plenty of chaos

By October 31, property owners must have submitted the assessment declaration for the new property tax. But many are having a hard time with it: According to the Federal Ministry of Finance, only just under 18 percent of the declarations had been received by mid-September. 6.2 million forms had been filled out online, and around 584,000 declarations had reached the ministry by post. Several major business associations believe the deadline urgently needs to be extended due to the burden on businesses. In turn, the German Tax Union and the Federal Chamber of Tax Advisors fear that the tax offices could collapse.

Finance Minister Christian Lindner (FDP) seems to be open to a possible extension of the deadline to give owners more time. However, this would have to be decided by the states. The new property tax calculation is to apply from 2025. Almost 36 million properties in Germany will have to be revalued. This will be done on the basis of information that all owners must submit. Older owners in particular are overburdened, as criticized by the Association of German Property Users. Complaints about the procedure have surfaced in many German states.