The real estate market in Germany likes to show itself with more than one face.

On the one hand there is the small condominium in the coveted city district and on the other hand the spacious single-family house in the vastness of the country.

Or the poorly insulated old building with the high ceilings stands next to the uniform new block - and yet there are sometimes worlds in between.

Another division characterized the past year, especially in the larger cities: According to the sales figures, the first half of the year was still extremely lively, as in previous years, while the second half of the year was suddenly much less busy.

Jan Hauser

Editor in Business.

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The Russian attack on Ukraine, the rising costs for construction and energy and, above all, the turnaround in interest rates in European monetary policy shaped the year - and caused some changes.

The expert committees in the eight largest cities, which evaluate contracts from the sale of apartments and houses in their city and can use this to cast a valid glance at past real estate developments, are also experiencing a break in market activity after decades of upswing.

According to the current and preliminary figures, transactions in Berlin, Hamburg, Cologne, Munich, Frankfurt, Stuttgart, Düsseldorf and Leipzig fell by around 25 percent in 2022 compared to the previous year.

Sales even fell by around 30 percent to around 60 billion euros.

A year ago, however, the real estate business was still picking up speed.

Thomas Weindel, chairman of the expert committee in Düsseldorf, felt the same way.

"In the first six months things really took off," he said.

After that, it consolidated in Düsseldorf, with prices in the second half still being above the previous year's values.

“There is huge uncertainty in the market.

It was and is noticeable.” The rising interest rates would have led to a pause, which is why transactions have declined.

Price decline especially in Munich, Hamburg and Frankfurt

In a digital round of the German Association for Surveying (DVW) - Society for Geodesy, Geoinformation and Land Management, Weindel exchanged views with his colleagues on Tuesday evening, who described it similarly.

In the past ten years, the prices per square meter of living space for apartment purchases (median values) in the eight cities have largely only known one direction: upwards.

This trend collapsed in the past year.

While the purchase prices for new apartments have risen slightly in some cases, the values ​​for used apartments have fallen significantly.

This drop in prices is particularly noticeable in the three most expensive cities of Munich, Hamburg and Frankfurt: Here, in contrast to the other cities, the determined sales prices for used apartments per square meter are more than 5,000 euros or, as in Munich, almost 10,000 euros, but fell in the second half of the year.

In Munich, Albert Fittkau observes that many people are waiting to see what happens next.

There was also a certain amount of uncertainty with the corona pandemic, but that calmed down relatively quickly.

The situation is now different with the war in Ukraine.

"Now nobody knows: how long will it take?" he said.

That makes the market uncertain.

It is likely to be difficult for investors who have recently acquired land and real estate.

In previous years, buyers could expect the value to increase over the next few years.

That has now changed and is leading to restraint.

"The demand for high prices for new buildings is no longer there," reported Michael Debus from the Frankfurt Expert Committee.

"Many investors say it is not foreseeable what will happen at the end of the year." The year 2022 was also inconsistent in Frankfurt: real estate prices rose in the first half, but fell in the second half of the year.

But what he also notices is that the apartments sold in the big city on the Main are getting smaller.

"I no longer have purchase price increases per condominium, but the price per square meter has gone up."

Leipzig is an exception

In Hamburg, Sonja Andresen from the local expert committee was also amazed at the development.

"The first and second half of the year were totally different - both in terms of sales and prices," she said.

There were far more sales of used homes than new homes.

Leipzig is an exception: Here things are almost the same as before, although the price level of around 2,500 euros per square meter for used apartments is well below the values ​​in other major cities.

"The prices have increased compared to the previous year," said Matthias Kredt from Leipzig.

The price level may still be moderate, even if there have been price increases in recent years.

For Stuttgart, Steffen Bolenz says that the divided market started there when the ECB started raising interest rates.

Due to the interest rate policy, a larger part of the buyers fell out - namely tenants who bought because of the low-interest loan.

As a result, sales fell.

The development was positive in the first half of the year and negative in the second half.

At the same time, inflation and the energy crisis are also concerns.

“The fear will have spread: What is actually happening and what do I need my money for?” he said.

However, the consequences do not affect everyone equally.

In Munich, Fittkau sees that around 1.5 million euros have to be put on the table for a house.

Their buyers are often heirs or owners of several properties and are less affected by cost increases.

"Whether heating costs increase by 1 percent or 7 percent doesn't matter in these circles," he said.

This suggests that the real estate market keeps different faces even with urban price declines.