Munich: prices for residential real estate keep climbing to new heights
Munich real estate prices reach a new record level. This is shown by the figures from the expert committee and Aigner Immobilien Research.
In the first three quarters of 2021, property prices in Munich continued to rise compared to the same period in the previous year. This is shown by the current analysis of the expert committee, of which Thomas Aigner, Managing Director of Aigner Immobilien GmbH, has been a member for many years. The square meter price for new apartments in good residential areas climbed by around eight percent to around 10,500 euros. At around 22 percent, the price per square meter for newly built semi-detached houses rose most significantly. A total of around 12 billion euros was turned over on the Munich real estate market between January and September 2021.
The price level on the Munich real estate market continues to rise and has reached new record levels. In the first three quarters of 2021, the number of purchase contracts rose by six percent compared to the same period of the previous year, while monetary turnover increased by 36 percent, primarily due to large-volume individual transactions in the commercial segment totaling over 1.25 billion euros.
The residential property market again showed strong sales. In the area of condominiums, which is particularly relevant for Munich, monetary turnover was 18 percent above the previous year’s level, while in the segment of single-family, terraced and semi-detached houses it rose by as much as 21 percent. With an increase of 52 percent compared to the same period of the previous year, the increase in sales was most pronounced in rental apartment buildings. In addition to the higher number of purchases in the individual segments, the overall rise in the price level is responsible for this development.
New apartments in average and good residential areas compared to the same period of the previous year by around eight percent each and costs on average now 9,600 euros or 10,500 euros per square meter of living space.
Semi-detached houses and newly built terraced houses in particular recorded price increases in the double-digit percentage range. For example, the purchase price level in the latter submarket increases by 14 and 15 percent, both for mid-terrace houses and for the more expensive end-row houses in the comparison. Prospective buyers & now raise an average of 1.21 or 1.36 million euros for a row house. Only mid-row houses in the existing stock are still below the million mark despite an increase of around eight percent, albeit just under.
The purchase prices for newly built semi-detached houses are developing particularly strongly, rising by almost 22 percent to 1.58 million euros, while existing properties are being sold by 15 percent to around 1.33 million euros.
Lack of investment opportunities and failed building policy
The managing director of Aigner Immobilien GmbH, Thomas Aigner, is not surprised that real estate prices in Munich continue to rise unaffected by the pandemic. The expert, who has been active in the Munich real estate market for over 30 years and who is closely monitoring developments, sees an ever-worsening excess demand:
“We have been experiencing for years what it means when the attraction of a city or a region meets a failed building policy. People want to live here because the economy is booming here and because it is nice to live near the mountains and well-known holiday destinations. What has been aggravating for over ten years is the additional demand for tangible assets. The financial and economic crisis of 2009, the low interest rate policy of the European Central Bank, which has left the key interest rate at zero since 2016 and thus made traditional savings products such as bonds and bank investments de facto worthless – all of this has resulted in investors and private investors transferring their assets to those that are less prone to inflation Investment opportunities such as real estate are stuck. And of course you buy them in attractive regions. “
The resulting ever-increasing demand could not be fully met due to a lack of space, but it was up to politicians to take pioneering decisions to remedy this situation.
“Instead of profoundly reforming municipal planning law and making a larger dimension of housing construction possible for entire metropolitan regions with land-use planning, people are taking refuge in symbolic politics and are basically taking building prevention measures. Let’s just think of Parkstadt Schwabing: Here the Argenta group of companies wanted to build up to 800 apartments, including subsidized apartments. But because after almost ten years (!) The investor still had no building permits, he gave up these plans and built the commercial units that were actually intended in the development plan. As is well known, Amazon is now there. Or let’s think of the new regulation of socially just land use (SoBoN), which recently led the company ECE to withdraw its plan to build up to 700 apartments next to the Olympic shopping center due to a lack of profitability. Here an ideology-driven politics meets reality – and unfortunately everyone involved loses. ”