Real estate in Germany continues to rise in price, mainly due to the active internal migration of young Germans and a large influx of foreign labor. The lack of affordable housing is forcing more and more families to leave big cities and move to the suburbs. As a result, the prices for apartments and houses in medium and small settlements are growing at the fastest rates now, as well as in rural areas.

What are the Reasons for The Prices Growth?

The high cost of living space actually squeezes young families into the suburbs or even in more remote settlements, including rural ones. Moreover, the supply of attractive jobs often grows there. In addition, there is less noise, fewer traffic jams, public transport is not as crowded, and various social problems are not as acute as in big cities. In some rural areas, prices have increased by 20-40 %.

As a result, housing in Germany is rapidly becoming more expensive now, not only in the largest cities but also far beyond them. This is the main conclusion of the Atlas of Housing 2019 (Wohnatlas 2019), published by Postbank. Its experts analyzed the situation in all cities and rural areas of Germany which are 401. If in 2017, property prices rose in 242 territorial units, in 2018 it was recorded in 365, which is over 90 %. On average, housing prices in the country rose by 7.2 % last year.

At the same time, at the highest rates in prices growth (20-40%) has been fixed in northern Bavaria, the neighboring southern part of Thuringia, and rural areas along the autobahn connecting Berlin, Wolfsburg, and Hanover. The absolute record for last year was the city of Suhl, with a population of 36,000 in the south of the East German state of Thuringia: here, housing on the secondary market increased by 48% in just one year.

Big City Lights

The capital of Bavaria will continue to be the city with the most expensive real estate in Germany, as the labor market continues to develop dynamically, and housing construction throughout the next decade will noticeably lag behind the needs. In Berlin, where more and more new startups in the field of information technologies are being created and where the sphere of highly qualified and knowledge-intensive services is rapidly developing, the specialists predict a “super cycle” of the price increase.

Experts believe that the current cycle of the prices increase will continue at least until 2022.