Munich: Real estate prices continue to explode – where is the living space?

Munich: Real estate prices continue to explode – where is the living space?

Apartment prices in Munich remain at a noticeably high level and thus send a clear signal about the challenges of the city's real estate market. According to a recent report by Mercury Munich is still considered the most expensive city in Germany for real estate investments. The average price per square meter is an impressive 8,461 euros. For 360,000 euros you could only buy 43 square meters of residential property in the Bavarian capital, while in the rest of Germany it would be an average of 117 square meters.

The price level varies greatly depending on the district. In over 22 districts of Munich, buyers can expect prices of more than 10,000 euros per square meter. The most expensive areas include Graggenau, where 25 square meters are offered for 360,000 euros, followed by Gärtnerplatz and Lehel. On the other hand, there are also comparatively cheaper districts such as Neuperlach and Fürstenried-West, where buyers can get between 51 and 56 square meters for the same price.

Price development and trends

The development of real estate prices gives rise to discussion. The Real estate consultancy Glaser reports that prices for apartments in Munich have fallen by around 11% since the beginning of 2023 - from 9,000 euros to around 8,000 euros per square meter. Interestingly, however, condo prices increased by 1.5% in May 2025 compared to the previous quarter. This suggests that market conditions are anything but stable. In a 15-year comparison, prices have still risen by an impressive 135%.

Despite the falling prices since 2023, there is some uncertainty in the industry. Domino construction highlights that several factors influence current price forecasts. Rising building interest rates and high inflation have increased financing costs and influenced the purchasing behavior of potential buyers. While prices for existing properties have fallen, new build properties are showing that they can hold their own due to energy standards and sustainable construction methods.

Demographic developments and housing shortages

Another aspect that influences the Munich real estate market is the demographic shift. The city is seeing a loss of people aged 30 to under 50, while young adults are moving to the city, further driving price growth. According to current estimates, Munich would have to build 73.8 new apartments per 1,000 inhabitants annually by 2030, but in fact only 11.8 apartments were built per 1,000 existing apartments.

The experts agree that solutions to the housing shortage are still a long time coming. Even if Munich is considered to be future-proof despite the high real estate prices, the pressure on rental prices and the demand for living space will remain high in the coming years. Buyers currently have to raise an average of 14.7 years of annual household income to purchase a 117 square meter property - compared to 10.8 years in Upper Bavaria and only 6.4 years nationwide.

The current situation on the real estate market in Munich channels numerous challenges that both investors and future property owners must keep in mind. It remains to be hoped that the situation can be improved through innovative construction projects and clear political measures.