The situation in the German housing market remains tense: new figures from the Federal Statistical Office (Destatis) have shown that rising prices for houses and apartments in Germany once again hit a record rate at the end of 2021. 

House prices in Germany up 12,2 percent in last quarter of 2021

People wanting to buy a house in Germany will continue to dig deeper and deeper in their pockets as prices continue to skyrocket. Between October and December 2021, the cost of residential real estate rose by a record-breaking average of 12,2 percent compared to the same period in 2021, not including other costs like property taxes and estate agency fees. 

“This is again the strongest price increase in residential real estate transactions [seen] since the time series began in 2000,” Destatis wrote in its report. On average, prices for residential real estate rose by 11 percent in 2021, up from 7,8 percent in 2020. 

Prices rose most in rural areas, but still sharply in cities

The last quarter of 2021 saw a particularly sharp increase in the prices of houses in sparsely-populated rural areas, where the average rise was measured at 15,9 percent. In more densely populated rural areas, the average increase was around 14,5 percent. With the coronavirus pandemic accelerating a trend towards more remote working, demand for real estate in the countryside has increased significantly. 

However, although the increase wasn’t as marked, prices still continued to go up in the seven largest German cities. Berlin, Hamburg, Munich, Cologne, Frankfurt, Stuttgart and Düsseldorf all recorded above-average increases, with house prices rising by around 12,8 percent in 2021, and the cost of apartments increasing by 12,7 percent. 

The Bundesbank has for a long while been warning that property in Germany is becoming more and more overpriced, with potentially disastrous consequences for the market. In its most recent monthly report, the German bank said that in 2021 real estate prices in cities were “between 15 and 40 percent above the price indicated by fundamental socio-demographic and economic factors.” In 2020, the estimated overvaluation was a maximum of 30 percent.