Großbank UBS study
Real estate prices in Frankfurt and Munich decreased significantly
In the past real estate boom, the housing market in the two metropolises had run hot. Now he has cooled down. The breathing space for tenants and buyers should not last long.
According to the major Swiss bank UBS, the real estate markets in Frankfurt and Munich have cooled down significantly. Since their highs in the past real estate boom, the purchase prices have fallen by around 20 percent adjusted for inflation. Therefore, there is no longer any acute risk in both cities for a real estate bubble, UBS writes in its “Global Real Estate Bubble Index”.
For years, UBS has been analyzing residential property prices in metropolises worldwide and where real estate bubbles are threatening. Among the 21 cities under consideration, the bank sees the greatest risk currently in Miami, Tokyo and Zurich. Frankfurt (11th place) and Munich (13) are in the middle area. At the end there are Paris, Milan and São Paulo.
According to UBS, Frankfurt and Munich were still one of the cities with the greatest risk of a real estate bubble worldwide in 2022. Since then, the purchase prices have been significantly fallen due to increased loan rates, while consumer prices grew strongly and also increased income.
Again increasing prices and rents expected
“The residential property markets in Munich and Frankfurt have stabilized after the correction,” said Maximilian Kunkel, chief of chief for UBS in Germany. The location and affordability remains tense. “With a view to falling interest, a solid labor market and persistent shortage of offer, we expect investors in both cities to benefit from recovery in prices and rising rents in the medium term.”
Economic crisis stands in the way of a new boom
In Frankfurt, the growing financial sector supports the demand for living space. The rents are likely to continue to rise, according to UBS. “The narrow offer supports both prices and rents.”
Real estate prices in Munich have already stabilized. While the demand there is again greater, a rapid price increase in the face of the economic situation remains unlikely.
For the study, UBS compares purchase prices and rents with the development of income and economic output – and looks whether there are striking deviations. The debt of households and the development of construction are also taken into account. Exaggerations here have been an alarm signal for real estate bubbles, such as in the USA and Spain.
dpa
Source: Stern
