Families in the city: Where the space for living is dwindling!

Families in the city: Where the space for living is dwindling!

The residential real estate market is facing major challenges, especially for wealthy families looking for suitable living space. The trend towards ever smaller apartments is making it increasingly difficult for families who need space for children, pets and possibly older relatives to find suitable properties. How the press reported, the availability of living space in inner-city locations is severely limited.

The situation is further complicated by the design of smaller units. Recently, there has been an increase in the construction of luxury apartments, which are significantly smaller than the traditional properties measuring around 300 square meters. Peter Marschall, owner of Marschall Immobilien, explains that the preferred apartment size is now around 150 square meters. These smaller units often cost around 3.5 million euros and usually offer two to three rooms, which is not enough for many families.

Scarcity and prices in the market

The options are even more limited, particularly in popular districts such as the 1st and 9th districts. There are only 30 five-room apartments available here, many of them in the high single-digit or even double-digit million range. The supply is relatively limited due to the construction of smaller units, which makes finding housing a challenge for large families.

In parallel, a look at the larger residential real estate market shows that the market is in a recovery phase. Loud Engel & Völkers The average asking price for existing condominiums in the first half of 2024 was EUR 3,822 per square meter. Munich remains the most expensive city in Germany, with a price per square meter of EUR 8,715.

Financing situation and market developments

However, construction activity shows a declining trend as building permits have decreased. This development increases the shortage of living space. Energy efficiency is becoming increasingly important in property quality, which continues to attract buyers and keep interest in homes high.

Trading activity has stabilized in 2024 after a rather weak phase in the previous year. Improved financing options and a lower price level have increased the willingness to buy. The interest rate policy of the European Central Bank also plays a crucial role: A first cut in key interest rates in June 2024 did not immediately affect building interest rates, but they fell to just under 3% in August 2024, which is over one percentage point below the previous year's level. Experts expect further small interest rate cuts for the rest of the year.

Overall, the improved interest rate outlook suggests that demand and possible price increases could increase in many residential areas. Buyers again have the opportunity to choose between different properties without having to compete for the best properties.