Rents are rising rapidly: Why buying now in Munich is better!

Rents are rising rapidly: Why buying now in Munich is better!

A lot has happened on the real estate market in Germany in recent years. A current market analysis by the Von Poll brokerage group shows that purchase prices for residential property have fallen in many cities, while rents continue to rise. This particularly affects the so-called A cities such as Cologne, Berlin, Munich and Hamburg. What is particularly noteworthy is that buying has become more attractive in certain regions, even though interest rates have risen. [Focus] reports that rents in relation to income in Cologne have risen to 107.3%, while purchase prices here have risen by 104.9% - an exciting development that has made many people interested in housing sit up and take notice.

If you look at the A cities as a whole, the pressure on rental prices for households with low incomes is particularly high. Rents can account for up to 30% of net income. The analysis shows that the rental-purchase price ratios in cities like Berlin have increased by a remarkable 24%. But at the same time there is hope: in many cities, and this also applies to Cologne, prospective buyers have more room for maneuver due to lower prices and stable financing conditions. Here the dream of owning your own home becomes more realistic again.

Buy or rent – ​​make the decision

There was a slightly positive trend in the third quarter of 2024: condominium prices rose by 1% compared to the previous quarter, and owner-occupied homes rose by 0.8%. This stabilization after a sharp decline since the end of 2022 suggests that investments in the real estate sector are increasingly coming into focus again, especially with the currently cheaper mortgage interest rates. [Test] highlights that despite rising rental prices, the purchase decision depends heavily on where you live. In more expensive cities such as Munich, rental prices can reach over 30 euros per square meter, while exceptions exist in other regions.

A look at the prices per square meter clearly shows how regionally the situation varies. [Statista] reports that condominium prices in Munich are almost 11,000 euros per square meter, making it almost unaffordable there. In comparison, there are price differences of 3,000 to 4,000 euros in other German cities. This immense difference has an impact on people's purchasing power and leaves many with the question: rent or buy?

The future prospects

If you live in a top city, the risks and challenges associated with rent development should not be underestimated. Rents have been rising continuously since the mid-1990s, while purchase prices have fallen in recent years and are now partially rising again. The increase in single-person households and the high demands on living space are increasing the pressure on the already tense market.

The federal government has responded by creating a construction and housing ministry to counteract the housing shortage. Nevertheless, it remains to be seen whether these measures will take effect quickly enough to counteract the increased rents and the challenges of the lack of housing in the A cities in the long term.

Overall, it can be said that there are many changes in the real estate market. Whether you buy or rent – ​​it is important that you are well informed and make the right decision. Current developments show that despite higher interest rates, the chances of purchasing a home could be better than ever.