So expensive will be living until 2030

The WORLD from 16.04.2019 | By Stephan Maaß - Business Editor

The boom in the German real estate market will continue in the next few years, according to a study. More than half of the 401 districts and cities are facing rising prices. A region even threatens to crack the 11,000-euro mark.

In the real estate market, minority shots are increasingly mixed into positive forecasts. Rising real estate prices burden tenants and future buyers. Only the missing signals for a sustained rate hike are beneficial - but also an important reason why the price rally on the housing market can continue. At least the owners of houses and land can still be happy if prices continue to rise.

Postbank also sees this in one of its regular detailed forecasts of the price trend for residential property. Summary: The end of the price increase is not in sight until 2030. The evidence of Postbank Wohnatlas 2019, for the experts of the Hamburg Institute of International Economics (HWWI) have created a purchase price forecast for the twelve years from 2018.

In more than half of the 401 German districts and cities, homeowners can therefore assume that their property will increase in value by at least 2030 in real terms. One reason for the high demand on the housing market is the growing number of inhabitants in and around the metropolises, especially in southern Germany.

Increased pressure due to increase in the number of households

In addition to the demographic development, the price driver is also the economic and income development. The attraction of the metropolises remains unbroken: More and more people prefer to work and live in the cities. The demand for living space exceeds supply, especially in central locations in many places, which drives the prices even higher.

"Condominiums in major cities are also in demand with investors from Germany and abroad. Anyone who wants to move into their own four walls should take a close look, as individual properties in, for example, the in-districts could be offered overpriced in an overheated market, "says Eva Grunwald, Head of Real Estate at Postbank.

The pendulum bill shows you where a real estate purchase is worthwhile
The development is still intensified, because the household sizes are smaller, so the number of households will rise more than the population growth. The Federal Statistical Office anticipates a strong increase in one- and two-person households and a significant reduction in the number of three- and four-person households by 2035 in its budget forecast. In 1991 there were 23 million households of the small sizes and of the large 13 million, by 2035 there will be 34 million one- and two-person households and only eight million with three and four inhabitants.

"Our forecasts are essentially based on assumptions about long-term demographic trends," says Dörte Nitt-Drießelmann, senior researcher at the HWWI. Values ​​of population size, household structure, age, employment or disposable income, and predictive changes in demand and investment behavior in the housing and construction sectors are the basis for the long-term forecast. The HWWI housing market model shows how these factors influence each other. At the end of the model calculation is the purchase price forecast for the period from 2018 to 2030.

According to forecasts, the price increase in the metropolises is the strongest in Germany's already most expensive city: For Munich, the experts predict an annual increase of 1.81 percent in real terms. Square meter prices of more than 10,000 euros are already normal there. On average, it was 7509 euros per square meter, the real estate buyers in the Bavarian capital already had to invest in 2018. By 2030, the real estate market is likely to have exceeded the nominal 11,000 euros on average.

In second and third place, Dusseldorf followed with an increase of 1.09 percent and Cologne with 0.98 percent. In Frankfurt am Main and in Berlin, prices will rise by 0.76 percent annually until 2030. This is the slowest increase among the seven largest German cities.

Adjusted for inflation, a square meter price of € 4,000 will rise to a good € 4,500 by 2030, with a one percent increase. But adding two percent inflation adds up to 5700 euros per square meter.

Big price jumps are not only to be expected in the big cities, says Postbank. Ownership prospects are almost always good for residential property, especially in the south and northwest. Among the ten districts with the highest forecasts of value increases are seven Bavarian districts.

Particularly high increase in the district Oberhavel

"The Munich boom is having an effect here: three of these districts - the districts of Munich, Erding and Ebersberg - border the state capital. The districts of Landsberg am Lech and Pfaffenhofen can be counted as part of the extended bacon belt of the Isar metropolis, "says Grunwald.

Around Berlin, prices are likely to rise even more than in the capital itself, the researchers expect. According to forecasts in the district of Oberhavel (plus 0.97 percent real per year by 2030), the average annual increase in the north of the capital is expected to be particularly steep.

Brandenburg's state capital Potsdam even makes it into the top ten, where Postbank and HWWI predict annual growth rates of 1.69 percent. The steepest increase forecast the experts for Heilbronn. In the city of Baden-Württemberg, residential real estate is expected to be 2.29 per cent more expensive by 2030.

The latest survey shows that prices are also rising beyond the large urban centers and that many large and medium-sized cities have long been the scene of the real estate boom. In addition to Heilbronn and Potsdam, according to the Postbank forecast, the independent cities of Landshut, Dresden, Leipzig, Aachen, Ingolstadt and Münster are likely to achieve annual price increases of more than one percent. "These cities benefit from the fact that record prices in the metropolises in some cases have a deterrent effect and, as an alternative, smaller centers are taken into consideration," says Grunwald.

In structurally weak regions with declining populations, owners can expect falling prices. The Postbank scenario affects mainly the eastern German states, the Ruhr area and the Saarland. Therefore, buyers interested in such an area but would not throw the gun in the grain, says Grunwald: "A negative price forecast does not necessarily apply to every object. Individual location and equipment of the property also play a role. "For the personal life planning and financial security in old age, the purchase of apartments in these regions could be a gain.

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Source: Die Welt