The average price of detached and duplex houses in the biggest cities in Germany varied between approximately 5,000 euros and 10,000 euros per square meter in the second quarter of 2023. Housing was most expensive in Munich, where the square meter price of houses amounted to 9,931 euros. Conversely, Berlin was most affordable, with the square meter price at 4,802 euros.
How have German house prices evolved?
House prices maintained an upward trend for more than a decade, with 2020 and 2021 experiencing exceptionally high growth rates. In 2021, the nominal year-on-year change exceeded 10 percent. Nevertheless, the second half of 2022 saw the market slowing, with the annual percentage change turning negative in the fourth quarter of the year and that trend continuing in 2023. Another way to examine the price growth is through the house price index, which uses 2015 as a base. In the second quarter of 2023, the house price index measured about 150 percent, which means that a house bought in 2015 would have appreciated by 50 percent during this period.
Is housing affordable in Germany?
Housing affordability depends greatly on income: High-income areas often tend to have more expensive housing, which does not necessarily make them unaffordable. The house price to income index measures the development of the cost of housing relative to income. In the first quarter of 2023, the index value stood at 120.8, meaning that since 2015, house price growth has outpaced income growth by about 21 percent. Compared with theaverage for the euro area, this value was higher.
