Living space remains scarce in Frankfurt, but this does not apply to all price segments: The Hypovereinsbank reports an oversupply of small and exclusive apartments in the central districts.

This emerges from a housing market report presented by the financial institution on Wednesday.

Regional manager Andreas Kinnel attributes this development to the numerous high-rise residential buildings that have been built near the city center in recent years and some are still in the planning stage.

Kinnel reports declining pre-sale rates with slower marketing of these residential towers.

Rainer Schulz

Editor in the Rhein-Main-Zeitung.

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Despite the rising interest rates for construction loans, living space in Frankfurt remains in demand.

"Frankfurt is experiencing the longest real estate boom in its history," says Kinnel.

The rental and price development in all segments has so far exceeded all forecasts.

Particularly in the case of detached homes on the outskirts of town, as well as semi-detached and terraced houses, there is a high level of demand when there is far too little supply.

The prices for new buildings have risen by ten percent in the past year.

Meanwhile, the rise in building land prices has slowed somewhat.

Here, too, the rates of increase were in double digits for years, but last year the increase was only five percent.

"Investors are becoming more cautious," is Kinnel's assessment.

The demand for home ownership is primarily driven by the "generation of heirs," says Philip-Sebastian Matthes, who is responsible for investment advice at Hypovereinsbank.

But many average earners are still interested in financing.

However, single people and couples in particular can afford the high prices per square meter in Frankfurt, for whom a smaller apartment is sufficient.

Kinnel reports that young families in particular who need more living space are increasingly looking for homes outside the city limits.

In particular, the eastern Frankfurt catchment area in the direction of the Main Valley and Hanau is gaining in importance.

The price difference there compared to the Main metropolis is around 30 percent.

Lack of cheap rental housing

Hypovereinsbank believes that the market for micro-apartments and boarding houses in Frankfurt is saturated.

Hypovereinsbank ignored the stock segment in the market for condominiums in its analysis.

However, she is dedicated to the rental housing market: there is a lack of apartments in the medium and low price segment as well as family-friendly apartments and small apartments for students and trainees.

"Not enough has been built here so far," they say.

The average rent for a new apartment is now around 18 euros per square meter.

That's two euros more than in 2019.

Despite the turnaround in interest rates, the experts at Hypovereinsbank assume that prices on the housing market will continue to rise.

"Frankfurt is a growth market," says Kinnel.

Inexpensive housing in particular is in short supply.

If construction activity remains high, the market could relax in a few years.

A surplus of supply is emerging in the upper price segment of condominiums.

Hypovereinsbank expects “overheating tendencies and price corrections” in this segment.

With the exception of this upper segment, there is still no end in sight to the rise in prices, although the pace is slowing down.