Real estate market in the Munich area: Falling purchase prices, rising rents and a lack of affordable housing - analysis by a financial expert

Real estate market in the Munich area: Falling purchase prices, rising rents and a lack of affordable housing - analysis by a financial expert

According to a report from www.sueddeutsche.de, the current regional report for the residential real estate market in the Munich area from the Real Estate Association of Germany (IVD) South Region shows that the real estate market in the Munich area remains in a precarious state in the fall. Purchase prices continue to fall while rents continue to rise. Older residential properties with energy-related problems or in need of renovation are particularly difficult to sell and are often only sold at significant discounts. High inflation, rising mortgage interest rates and high demands on energy standards have led to a turnaround in the purchase market and increasing difficulty in financing. The number of building permits is also declining, which will lead to a significant shortage of supply and will particularly affect the affordable rental housing market.

The effects of these developments on the real estate market in the Munich area are diverse. Although the falling purchase prices could attract potential buyers, the price reductions are put into perspective given the high level at which prices have been in the surrounding area for years. The increased interest rates make financing difficult, which is why potential buyers are more likely to look for rental properties. This in turn increases the pressure on the rental market and causes rents to rise. The decline in the number of building permits will only become noticeable with a delay and will lead to a significant shortage of supply, especially in the affordable rental housing market.

The federal government is urgently required to take measures to economically stabilize the construction and real estate industry and to stimulate weak housing production again. It is important that the government takes measures to facilitate financing for potential buyers as well as provide incentives for developers to stimulate housing construction activities.