Munich is known for its dynamic and often expensive real estate market. With a growing population and limited building land, the question arises: How will the real estate market develop in the coming years? In this article we take a look at the current trends and forecasts for 2024 and 2025.
The real estate market in Munich is one of the most expensive in Germany and is characterized by high demand and limited supply. In 2040 the population is expected to reach 1.8 millionNeed for living spacecontinues to hold high.
According to Statista, a newly built condominium cost an average of around 12,000 euros per square meter at the beginning of 2023.In the first quarter of 2024the price has fallen to 10,745 euros.For single-family homesThe price per square meter was around 9,846 euros per square meter of living space.
The market is under pressure from rising construction and energy costs, influenced by the Russian war of aggression on Ukraine. These factors, together with interest rate increases by the European Central Bank, are complicating conditions for investors and ongoing construction projects. In order to meet these challenges, the city council has launched the housing policy action program “Living in Munich VII”, which will provide two billion euros for subsidized and climate-friendly housing by 2028.
Trends and developments
Real estate prices in Munich are falling significantly. In the last two years, condominium prices have fallen 13 percent,as the Süddeutsche Zeitung reported on June 17, 2024.
The number of condominiums sold has fallen dramatically. While 10,960 properties changed hands in 2021, there were only 6,910 in 2023. However, there are signs of a market revival. In the first two months of 2024, the number of purchase contracts increased by 38 percent compared to the same period last year. This development could indicate a possible recovery in the market, explainedthe local representative Kristina Frank (CSU)in April 2024.
Buying and selling real estate
Despite falling prices, Munich remains an attractive location for property buyers. Numerous new building projects are currently being built in the west of Munich. Between Freiham and Aubing1,200 new apartments for around 3,100 peoplewill be built, which will affect the increase in traffic in this area. Another new development area is also being planned in Munich's northeast near Daglfing.
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Rental market
Munich has the highest rental prices in Germany. In the Altstadt-Lehel district, people paid an average of 23.99 euros per square meter in 2020. The average price of newly rented apartments in good locations is now over 20 euros per square meter.
Rental prices continue to rise, including in the surrounding regions. In Ottobrunn, the basic rent rose from 12.15 euros in 2016 to 18.33 euros in 2024, which corresponds to an increase of over 50 percent.
In order to stop the rent spiral, the DGB district board is calling for ita six-year rent freeze. This measure is intended to prevent income development from not keeping up with rising rents.
Forecasts for the real estate industry 2024/2025
The Munich real estate market remains attractive despite current challenges. Experts agree that the demand for living space in Munich will remain high. Prices could stabilize or fall slightly, especially if interest rate hikes and construction costs continue to rise. Old, inefficient buildings are expected to see a slight decrease in price, while modern/new buildings will only fall slightly in price, if at all. In the long term, the need for sustainable and energy-efficient living space will increase. Prices will generally remain high until supply meets demand, which is unlikely to happen until 2040.
Regular market reportsprovide valuable insights into the current development of the real estate market in Munich. The reports help investors and buyers make informed decisions based on solid analysis and metrics. Stay informed and use these insights to make your real estate strategy successful.
