Munich: Price growth in surrounding region particularly strong

With a population of around 1.5 million, Munich is currently the third largest city in Germany. As a former royal seat, with a renowned university and a superb reputation as a centre of culture, media and science, the Bavarian capital remains hugely popular both nationally and internationally. Last year, Munich was once again named among the world’s most liveable cities, ranking 13th in the “Quality of Life 2021” survey list published by the British magazine “Monocle” – ahead of cities including Berlin, Amsterdam and Madrid. Its enduring appeal as a residential location meant that prices for residential property continued to rise last year, and saw Munich retain its frontrunner status as the most expensive city in Germany. “Prices both for apartments and for detached and semi-detached houses in Munich are once again at a nationwide high. As demand for homes here continues to increase strongly, prices have risen particularly sharply in boroughs in the immediate vicinity of the city,” says Florian Freytag-Gross, CEO of Engel & Völkers Deutschland GmbH.

Apartments: Excess demand again sees prices increase

The average asking price for existing freehold apartments in Munich was 10,018 euros per square metre in Q4 2021, which marks the highest price of anywhere in Germany for this segment. This represents a 13.5 percent increase in prices over the same quarter in the previous year. The highest priced district for freehold apartments in 2021 was Altstadt-Lehel (14,680 euros per square metre), followed by the neighbouring district of Ludwigsvorstadt-Isarvorstadt (13,883 euros per square metre). Engel & Völkers also recorded the steepest price rises in these two districts compared to the same quarter in the previous year – of 23.6 percent and 17.8 percent, respectively. Prices for freehold apartments in Maxvorstadt were high as well. In the cases of exceptionally luxurious apartments in Munich’s most desirable neighbourhoods, prices reached as much as 27,000 euros per square metre.

In Q4 2021, newly built apartments sold in Munich for an average of 13,149 euros per square metre, representing a 22.6 percent rise compared to Q4 2020. In addition to a large surplus in demand, this considerable increase is due to the sharp rise in construction prices.

Houses: Highest prices found in the Bogenhausen district

The average asking price in Q4 2021 for detached and semi-detached houses was approximately 1.4 million euros, which is 11.6 percent higher than the same quarter of the previous year. This means that Munich remains the most expensive major city in Germany for detached and semi-detached houses. The highest prices in 2021 were commanded in Bogenhausen, at up to 30 million euros, followed by Neuhausen-Nymphenburg at up to 25 million euros and Untergiesing-Harlaching with top prices of 13.5 million euros.

Growth in prices significantly stronger in surrounding region than in city itself

Once again, Engel & Völkers recorded significantly stronger price growth in Munich’s greater metropolitan area than in its more central districts. “The availability of properties in the surrounding region is now limited on a similar scale to neighbourhoods within the city, and this is also reflected in the prices we are seeing,” says Florian Freytag-Gross, adding: “In fact, prices for detached and semi-detached houses in locations surrounding Munich rose by 19.7 percent in Q4 2021 compared to the same quarter in the previous year.” The average asking price in the boroughs around Munich such as Dachau, Fürstenfeldbruck, Starnberg, Erding, Freising and Ebersberg was approximately 1.2 million euros, almost reaching prices commanded within the city. Grünwald and Pullach to the south of Munich continue to rank among the highest priced boroughs in the Munich region and in the whole of Germany. In these particular municipalities, known for their grand mansion properties, the average asking price in 2021 was 3.19 million euros and 2.88 million euros, respectively. “Despite prices remaining persistently high and the number of homes coming up for sale still very limited, there is no foreseeable decline in demand, either in Munich or in the surrounding region. We therefore expect further price rises in 2022, but at a somewhat more moderate level,” Florian Freytag-Gross reveals.

Other trends relating to purchase power and property prices in German cities can be found (in German) in the “Engel & Völkers Market Report for Residential Property in Germany 2021/2022”.