City of Munich invests 800 million euros in apartment purchases - A look at the real estate market.

City of Munich invests 800 million euros in apartment purchases - A look at the real estate market.

According to a report in the Süddeutsche Zeitung (SZ), the real estate market in Munich has completely turned around. Until 2021, the city could hardly count the offers for apartment purchases. But now there is a large surplus of supply that the city's human resources and financial resources cannot cope with. The city of Munich has spent a total of 800 million euros in the last five years to take advantage of the flooded housing market. The majority of these expenses resulted from private purchases. The right of first refusal of municipalities when purchasing real estate was restricted by the Federal Administrative Court in 2021 and now only applies to largely vacant properties. As a result, private purchases have increased sharply.
Rising interest rates and fears of a real estate bubble in Munich are also contributing to the fact that many properties are for sale. However, despite rising interest rates and the city's purchase program, rental prices have not changed positively as long as the numerical ratio between apartment seekers and available apartments remains unchanged. The creation of building permits is falling sharply, which could lead to a shortage of new housing. With an expected population growth of 1.82 million inhabitants by 2040, at least 5,000 new apartments would have to be built every year to meet the increasing demand. However, rising interest rates could lead to potential property buyers increasingly accessing the rental market and causing rental prices to rise.