Soaring House and Apartment Prices Push Potential Buyers Away
Soaring property costs stymie new homebuyers' aspirations - Soaring home prices hinder novice homebuyers' entry into the real estate market.
If you're dreaming of owning a new house or apartment in Munich (or anywhere in Germany, really), brace yourself for some challenging odds. Recent price surges and slightly increased mortgage interest rates are deterring potential buyers, a survey by mortgage broker Interhyp reveals.
Last year, merely 51% of respondents found residential real estate within their budget. This year, that number dropped to 55%, even though it's higher than two years ago. The online survey polled around 1,000 individuals intent on purchasing property, who've been on the hunt for the past couple of years, or recently made a property investment.
The Rollercoaster Real Estate Ride
The real estate market has been on a rugged ride lately, and these survey findings perfectly depict the turbulence. Surging interest rates in 2022 and 2023 caused many aspirants to put their homeownership dreams on hold. Two years back, less than half of the respondents believed residential real estate was affordable. But due to a massive number of sellers unable to sell their properties at their anticipated prices, prices plummeted across the board.
The downward trend seems to have ended, says Interhyp, as residential real estate prices jumped about 5% since January 2024. Simultaneously, interest rates have dipped slightly. "The greater demand for real estate is evident in this shift," states Interhyp CEO Joerg Utecht. An impressive 68% of survey participants estimate that prices have gone up in the past year.
- Interhyp
- Munich
Germany's Widening Property Affordability Gap
Germany's residential property market has seen robust growth, with an average yearly price increase of 2.9% per square meter — currently averaging EUR 5,478 (approx. USD 5,764) as of early 2025[1]. Demand for properties in major cities like Munich, Berlin, and Hamburg is skyrocketing, with Munich requiring approximately 11,300 new flats annually[1].
To combat this housing crisis, the German government is mulling over extending rent control measures and streamlining construction processes[1]. In the face of rising mortgage interest rates and depleting affordability, the outlook for potential buyers in Munich remains challenging.
As it stands, potential buyers face escalating property prices, lofty mortgage payments, and stiff competition in Munich's real estate market. Despite the minor drop in interest rates, housing affordability might continue to be a pressing concern for aspiring homeowners in the bustling Bavarian city.
To alleviate the escalating housing affordability concerns in Munich, the government could consider implementing community policies that subsidize vocational training programs for skilled tradespeople, thereby fostering a more efficient construction sector and reducing the time needed to build new homes. This approach would not only create job opportunities but also help address the housing shortage. Additionally, exploring innovative financing solutions, such as lower-interest mortgages or shared-ownership schemes, could make homeownership more accessible for a wider range of people.
