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Nearly 20 percent revenue growth in Germany; Berlin remains the top-performing location
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4.4 percent increase in transactions
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Most sales per 1,000 residents in Leipzig and Chemnitz
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Average apartment price rises to 250,272 euros; in the top 8, it stands at 456,233 euros
Berlin, September 29, 2022 – Revenuefrom apartment sales in Germany’s 80 largest cities rose by 19.4 percent in 2021 to a record level of nearly 43 billion euros. The absolute number of condominiums sold also grew by 4.4 percent to 127,967 units. These are the findings of the 15th ACCENTRO Homeownership Report 2022 by ACCENTRO Real Estate AG in collaboration with the German Economic Institute (IW). As part of a special analysis, the team led by Prof. Dr. Michael Voigtländer also examined the effects of rising construction interest rates and inflation on the homeownership market.
The Homeownership Report is the only German publication that compiles and interprets data from appraisal committees on all condominium transactions in all major German cities. The report thus differs from other publications, which are mostly based on expert estimates or the analysis of listing data.
Sales See Double-Digit Growth
Total sales in 2021 rose by 19.4 percent compared to the previous year, from 36 billion euros to 42.864 billion euros. With 127,967 transactions, the number of sales in Germany also rose by 4.4 percent. In Germany’s eight largest cities (Berlin, Hamburg, Munich, Düsseldorf, Cologne, Stuttgart, Frankfurt am Main, and Leipzig), 55,939 apartment sales were recorded, representing an increase of 9.63 percent. The strongest increases in sales over the past ten years were recorded primarily in medium-sized cities in eastern Germany, such as Gera (+774%), Halle (Saale) (+468%), and Chemnitz (423%). In Siegen and Remscheid, however, sales declined.
“Last year, medium-sized cities served as an anchor of stability in sales figures. This makes these locations attractive to investors. Among the reasons for this are the favorable economic conditions and low entry prices,” explains Lars Schriewer, CEO of ACCENTRO Real Estate AG. “This trend has been evident for more than ten years. But major cities also remain in high demand, as our report shows.”
Among the top 10 cities with the strongest sales growth over the past ten years are, in addition to Gera, Halle (Saale), and Chemnitz, other medium-sized cities, including Magdeburg (+332%) and Offenbach, which saw a 299 percent increase in sales. In 41 of the 80 cities surveyed, fewer apartments were sold in 2021 than in the previous year. In contrast, 16 cities achieved double-digit percentage growth. These accounted for 38 percent of all sales. The car-making city of Wolfsburg recorded the largest increase in transactions (+75%), followed by Kassel with 42 percent.
Demand Is Rising
Despite the continued high demand for housing, the shortage of supply, and insufficient completion rates, catch-up effects in the number of transactions were observed in 2021, particularly in the top 8 cities. Berlin stands out in this regard. The 19,784 apartment sales reported in the capital account for more than 15 percent of all transactions. Munich follows in second place with 10,965 sales, and Hamburg ranks third with 6,241 sales. Given the size of these cities, this is not particularly surprising. What is striking, however, is that two East German cities—Leipzig and Dresden (5,481 and 4,071 units sold, respectively)—round out the top five.
“In 2021, more than 1,000 transactions were recorded in 34 German cities. This figure has remained constant for years, but it also underscores the fragmented nature of the German housing market. While half of all transactions took place in the ten largest cities, locations with lower transaction volumes were also of great interest to investors,” explains Prof. Dr. Michael Voigtländer, head of the Financial and Real Estate Markets division at the IW, who was once again responsible for data collection this year.
Leipzig Has the Most Real Estate Transactions Per 1,000 Residents
Real estate in eastern Germany, in particular, is highly sought after by buyers. Leipzig takes the top spot with 9.1 apartments per 1,000 residents. Chemnitz slips to second place with a figure of 8.6 apartments per 1,000 residents that has not changed. Particularly active residential real estate markets can be found in Bremerhaven in northern Germany, in Dresden and Gera in eastern Germany, and in the major Bavarian cities of Fürth, Munich, Augsburg, and Regensburg. On average, 4.3 apartments per 1,000 residents were sold in the 80 markets surveyed. The major cities of Berlin (4.37), Düsseldorf (4.79), Munich (6.62), and Stuttgart (4.84) are above the average, while Frankfurt am Main (4.15), Hamburg (3.25), and Cologne (3.7) are below it.
“Transaction volumes are rising again. However, home ownership remains a scarce commodity, and demand continues to be high. This is leading to further price increases even as transaction volumes remain below the levels seen a few years ago,” adds Lars Schriewer. “It’s not getting any easier or cheaper for buyers to find an apartment.”
From 2020 to 2021, the average price of a condominium rose to 250,772 euros, representing an increase of 10.97 percent. In the top 8 cities, growth was even higher at 13.84 percent, with a sales price of 456,233 euros. As before, buyers in Munich and Hamburg pay an average of more than 500,000 euros, but Frankfurt am Main has also joined this elite group with a price of 555,804 euros.
Berlin Continues to Show Strong Overall Volume and Significant Increase in Transactions
Meanwhile, the German capital recorded a very high number of transactions and a 20 percent increase compared to the previous year. Although the previous year had seen an 11 percent decline due to the pandemic, the two-year comparison still shows a net increase of seven percent. In terms of sales volume, this growth amounts to 8.3 billion euros, an increase of 157 percent. Munich ranks second in this list as well, with sales volume of just under seven billion euros recorded in the Bavarian capital. Among the top eight cities, Stuttgart ranks last with transactions valued at 1.2 billion euros.
New construction remains a rare commodity—about one-fifth of all sales are new buildings
In 2021, a total of 25,274 new-construction units were sold, 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 eight cities saw their sales figures for new construction rise, in some cases by double-digit percentages, such as in Berlin, Munich, Leipzig, and Frankfurt am Main. In 50 cities, the figures stagnated or declined. “The real estate industry is currently facing major challenges on the cost side. Rising interest rates, as well as shortages of materials and skilled workers, are making it difficult to achieve the coalition’s goal of 400,000 new homes per year. Given the current conditions, the high completion figures seen in 2020 are likely a thing of the past. However, demand remains high and will not collapse in the coming years. This could even lead to further price increases,” explains Lars Schriewer.
While a record of 306,000 completed apartments was set in 2020, 2021 already saw an initial setback with only 293,000 units. To reach the new construction target of 400,000, capacity would have to be significantly ramped up; in reality, however, the opposite is true. Housing associations expect another decline in completion figures for the coming year, ranging from 50,000 to 70,000 apartments per year. New construction, therefore, remains scarce. This stabilizes new-construction prices or may even lead to further price spikes.
Interest Rates, Inflation, Construction Costs: Tight Housing Supply Will Drive Up Prices
The Bundesbank and research institutes currently project an inflation rate of seven to eight percent for this year. Rising construction interest rates and construction costs are leading to increased uncertainty in the capital market and slowing economic growth. Other factors, such as the shortage of skilled workers and material shortages, ultimately mean that fewer and fewer homes are being built—despite rising demand.
“Given the current circumstances, residential real estate is a safe investment that largely protects against inflation. Housing is and remains a basic need, and rising costs can be passed on through rent in the long term,” explains Prof. Voigtländer. “In light of the continued high demand for housing, we continue to expect prices to rise in the long term.”
“If rents rise as a result of inflation, this will also have a positive effect on real estate prices. Once the short-term impacts of the war in Ukraine and the energy crisis have been overcome, rising wages should make it possible to adjust rents in line with inflation,” adds Schriewer.
Furthermore, the ACCENTRO Homeownership Report 2022 notes that urban metropolitan areas currently continue to offer attractive entry opportunities for long-term investors. In the short term, the current uncertainties present significant opportunities for determined investors with a broad equity base, as competition is currently lower than in previous years. Should the current economic uncertainties ease, interest in homeownership will also increase again. The resulting rise in demand would drive up prices even further for the already scarce supply, and sales are likely to continue rising strongly.
About the ACCENTRO Homeownership Report
ACCENTRO Real Estate AG is publishing the ACCENTRO Homeownership Report for the 15th time. This year, the Homeownership Report was once again produced in cooperation with the German Economic Institute. The analysis is based on homeownership transactions from the 2021 reporting year in Germany’s 80 most populous cities. By drawing on data from appraisal committees, the report differs significantly from similar publications, which are usually based on expert estimates or the analysis of listing data. The report consists of two distinct sections. While the first section compares housing markets based on various criteria, the second section provides detailed market data for all 80 cities.
The findings of the ACCENTRO Homeownership Report 2022 on Germany’s eight most populous cities and developments over the past twelve years are also available online and can be filtered individually: https://accentro.de/wohneigentumsreport
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