Real estate prices are exploding: Tegernsee tops the list!

Real estate prices are exploding: Tegernsee tops the list!

Unfortunately, when it comes to home ownership in Germany's metropolises and the picturesque Alpine regions of Bavaria, things get ridiculously expensive. Current studies show that property prices remain exorbitantly high despite a decline in recent years. The situation is particularly dire at Tegernsee in the Miesbach district, where prices are at record levels, as Nau.ch reports. Even in smaller cities and rural areas, single-family homes are more accessible. But the big picture hasn't really improved yet.

The study by the German Economic Institute (IW) in Cologne and the credit broker Interhyp has created an affordability index that takes a closer look at the affordability of home ownership. The index measures the ratio of property prices to income and shows that although it has become more affordable than it was in 2023, the wave of unaffordable offers remains unbroken.

Index and reality

A look at the index reveals that things are anything but easy for the cities of Munich and Hamburg, with an index value of 59 and 90 respectively. This means that both in the Bavarian capital and in Hamburg the burden is well above the general affordability threshold of 35% of monthly net income. Holzminden in Lower Saxony, on the other hand, shines as the most affordable municipality, while Miesbach has the unpleasant title of the most unaffordable municipality. Overall, the average score across Germany is 100 points – and it looks like Germany is currently not a bargain.

• München: Indexwert 59
• Hamburg: Indexwert 90
• Holzminden: erschwinglichste Kommune
• Miesbach: unerschwinglichste Kommune
• Deutschlandweit: Durchschnittswert 100 Punkte

The availability of building land, construction costs and regulations drive prices up. These factors are just some of the supply and demand sides that are analyzed in Engel & Völkers. Population development, income levels and the general economic situation are particularly important - factors that are responsible for the increasing demand and thus also for the sometimes outrageous real estate prices.

The future in sight

One bright spot is that the index is currently higher than two years ago due to falling property prices and increased incomes, but lower than in 2015. It is forecast that purchase prices and rents will rise again by 3-5% annually in the coming years. Without broad support for new construction, the tense situation on the real estate market will hardly improve.

For those interested, the question remains: Where can you still find affordable living space? While the big cities and popular holiday regions hardly offer a bargain, it is worth taking a look at the smaller cities and less popular areas where property prices are more attractive. The search for a new home might require a good hand.