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Real estate prices: buy real estate despite the interest rate shock

Whether in the big city or in the country: real estate has become more expensive again in the past year. The prices for one- and two-family houses increased by 8.4 percent compared to the previous year and for condominiums by 7.8 percent. Compared to the previous quarter, the price increase of 0.5 percent and 0.7 percent was already significantly lower.

Even more dramatically, interest rates on mortgage loans have tripled since the beginning of the year. Instead of a zero or one, there is usually a three or four in front of the decimal point. This makes buying a house or apartment a financial feat.

However, our price tables for all cities and districts in the Federal Republic also show that there are definitely locations where a purchase is still affordable. We’ll help you find them.

Why the study of real estate prices is worthwhile for you

  • Real estate prices for all of Germany. Our real estate price query includes the prices for condominiums and single-family houses in different locations and furnishings for all 401 independent cities and districts in Germany, as well as the apartment rents and the regional purchase price-rent ratio (as of the fourth quarter of 2021). The figures for the third quarter of 2022 are already available for the seven largest German cities. After activation, you can call up the data for up to 20 independent cities and districts of your choice.
  • sample calculations. We use examples to show the monthly burden that builders and homebuyers have to reckon with today and how high credit rates and management costs are in comparison to rent.
  • Buy or rent? The Finanztest experts explain for whom buying can still be worthwhile despite the high initial burden and why it is important to pay attention to the local purchase price-to-rent ratio.
  • Graphics on rents and prices. Our map of Germany shows the square meter prices for condominiums in all cities and districts at a glance. Also: Charts on the development of prices and rents in Germany and in the seven largest German cities.
  • Magazine article as PDF. After activation, you will receive the magazine article from Finanztest 1/2023 on real estate prices in the top 7 cities and from Finanztest 8/2022 on real estate prices nationwide for download, as well as other articles on the real estate market that have appeared in Finanztest since January 2021.
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Square meter prices under 2,500 euros

The overview of prices shows where real estate is particularly expensive and where not. The regional differences are large. The data helps to find out where normal earners can still afford their own four walls and where they are no longer affordable – and under what conditions it is still worth buying.

The good news: In most cities and districts, the bill for buyers looks much better than in metropolises with high real estate prices such as Munich and Berlin. The square meter prices are lower there and also significantly cheaper in relation to the rents.

In 173 of the 401 rural districts and urban districts in Germany, there are still condominiums in good locations for less than 2,500 euros per square meter, including ten urban districts with more than 100,000 inhabitants. In almost half of all districts, apartments in good locations cost less than 25 annual rents.

Buying can still be worthwhile

After the rise in interest rates, house and apartment buyers must expect to spend significantly more per month on housing than on a rental apartment. So that you don’t overdo it financially, you should determine the maximum purchase price you can accept before you start looking for a property. Our short check (see below) will help with this.

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5 Tips for Maximizing Your Real Estate Investment

Despite higher prices and interest rates, buying can still be worthwhile. The prerequisites are a solid base of equity and a sufficiently high income to be able to bear the increased credit burden in the long term. Prospective buyers must also pay more attention than ever to the price and solid financing. We give five tips for your financing.

The local purchase price-rent ratio, which is mentioned in the price tables, is important. In many cities, condominiums cost more than 30 and sometimes even more than 40 years’ rent. With such a high purchase price-to-rent ratio, it is almost impossible to finance your own four walls. They then only pay off if there are high increases in rent and value in the future. But they might not happen.

property prices
Buy real estate despite the interest rate shock

Quick check: determine the maximum real estate price

Tip: Our large comparison of real estate financing shows how you can proceed wisely with real estate financing and which loan offers are best.

Price development on the real estate market

What a house or an apartment costs, how much equity buyers have to raise at least and what monthly burden they face – that primarily depends on the location. A price atlas helps with orientation. The Stiftung Warentest provides a detailed overview of purchase prices and rents for all 401 independent cities and districts, which were paid at the end of 2021 depending on the location and equipment. The prices and rents for the seven largest German cities have been updated for the third quarter of 2022.

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The data comes from vdp Research, the research institute of the Association of German Pfandbrief Banks (vdp). To determine the price, the experts evaluate around 350,000 real estate sales annually, which were financed and recorded in detail by around 700 banks. The special thing about the prices determined by vdpResearch: they are based on actually concluded sales contracts, not on advertisements or broker surveys.

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