Real estate prices continue to increase: Who can still afford a home?

Real estate prices continue to increase: Who can still afford a home?

Hildburghausen, Deutschland - Real estate prices in Germany continue to rise, and this also affects Cologne directly. According to the BVR banking association, a price increase of forecasted 3.2% for 2023 and 3.1% for 2026 is expected in the coming years. Especially in the big cities like Cologne, the situation on the housing market is described as tense. Home ownership remains a real challenge for many households because the newly created apartments decrease and the construction costs are constantly increasing. This can also be seen in the fact that real estate prices in the seven largest German cities from 2007 to 2024 have increased by over a third more than the available income. And this is anything but cheap - on average, buyers in Germany have to apply 6.4 annual net income to acquire a property.

In Munich, for example, the situation with 14.7 annual net income breaks all dimensions, while it is only 1.8 in the district of Hildburghausen. So it is clear that real estate prices have been in an upward trend for some time. After a phase of the price reductions, the costs have increased again since last summer

new building and construction costs

Another point is the increasing number of new mortgage degrees, which also indicates active participation in the market. Despite the precarious location, there was a little light at the end of the tunnel. Nevertheless, housing construction remains a challenge, especially in urban regions. The Federal Association of Volksbanken and Raiffeisenbanken urgently calls for measures to defuse the housing crisis to boost the new building.

political measures

The federal government is therefore not only planning faster permits, but also wants to do without the development plan in order to promote housing construction. Newly introduced special regulations in the building code should accelerate the planning and approval. However, the BVR sees the extension of the rental price brake critically by the end of 2029, as it has a long -term investment in the long term and could continue to cut the living space. These political steps are necessary to meet the increasing demand for living space and to facilitate market access.

Another aspect that further complicates the situation are the increased interest and construction costs that are due to the attack of Russia to Ukraine. These factors have a direct impact on building new housing, which should not be underestimated. The building land prices in large cities over 600,000 inhabitants were around 1,000 euros/m² in 2022 - an increase of 78% since 2017.