REVEALED: The German regions where property prices are falling and rising the most

Germany's property market has been hit by numerous shock waves lately, from sky-high inflation to sudden hikes in interest rates. 

In many cases, that's massively cooled the overheated demand for property in the country and brought an end to years of seemingly endless growth. 

According to the HWWI and Postbank Wohnatlas - an annual survey of property trends in Germany's 400 municipalities - almost two-thirds of regions saw a real-terms drop in house prices last year.

That's because the property market struggled to keep pace with the annual inflation rate of 6.9 percent, meaning that properties in some 63 percent of municipalities actually decreased in value, even if the asking prices went up. 

One good example of this is the Hanseatic city of Lübeck, where house prices were nudged up by just 0.7 percent last year. Factoring in the inflation rate, Postbank said properties here had really lost around 6.5 percent of their value. 

According to Dörte Nitt-Drießelmann, a researcher at the Hamburg World Economic Institute (HWWI), the current economic climate has reversed the seemingly endless upward trajectory in Germany's housing market.

"The boom times are over," she told Welt. 

Overall, house prices dropped by 0.7 percent in 2022(after adjusting for inflation). This is in stark contrast to real-terms increases of 14.2 percent and 9.6 percent in the two previous years. 

Notably, though, there were enormous differences in regional trends, with properties in some areas seeing their prices go down by almost a quarter and others seeing a 22 percent increase in asking prices.

Here's a rundown of some of the regions where prices are dropping and rising the fastest, as well as a rundown of the priciest and cheapest areas in the country.

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Which areas are seeing big declines right now?

According to HWWI and Postbank's research, the district seeing the steepest declines is the municipality of Amberg-Sulzbach - a rural area in Bavaria around 70km to the east of Nuremberg. Here, property prices plummeted by 23 percent in 2022.

This was followed by the district of Saalfeld-Rudolstadt in the eastern German state of Thuringia, where prices fell by 20.5 percent and the Saale district of Saxony-Anhalt, which saw declines of 18.4 percent. Other areas that saw significant drops in property prices included Hersfeld-Rotenburg and Celle in Lower Saxony, which dropped by 14.5 and 13.4 percent respectively, and Wittenberg in Saxony-Anhalt. 

Interestingly, some Bavarian towns that have boomed in recent years saw a dramatic reversal in fortunes. For example, prices in Amberg went down by 13.1 percent in real terms, the northern Bavarian town of Hof saw drops of 11.4 percent in real terms and Straubing, near Regensburg, saw property prices fall by 9.4 percent in real terms. 

Perhaps most surprisingly, Postbank also tracked real-terms drops in property values in Germany's seven biggest metropoles. In fact, big cities saw an average real-terms price drop of 4.9 percent over the course of the year.

Of these, the capital saw the most minor decline of 0.1 percent compared to inflation - largely because of the fierce demand for properties. 

"The demand for residential space in Berlin remains high, for example because the number of inhabitants is continuously increasing," said Achim Kuhn, Head of Customer and Product Management at Postbank. "At the same time, the capital has lagged behind other metropolises in terms of price levels for a long time and therefore still has catch-up potential."

The highest price drop among the seven largest German cities was recorded in Munich, where property values dropped by 6.9 percent in real terms - compared to an increase of 15.3 percent in 2021. Frankfurt am Main ranked second with a minus of 5.9 percent, while prices in Düsseldorf and Stuttgart also fell by more than five percent in real terms. 

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And where are prices going up?

Very few cities with more than 100,000 residents saw real-terms price increases in 2022, but there were clear regional trends in the ones than did. 

Among the winners were mainly cities from North Rhine-Westphalia such as Herne, Duisburg, Remscheid, Leverkusen, Wuppertal and Oberhausen. However, there were numerous signs of how much the housing market has changed in just a matter of months.

In 2022, the largest price increase for these major cities was just over five percent in real terms; a year earlier, the major cities saw property prices increase of almost 30 percent in some cases. In addition, the cities that are booming now are almost different from the top 10 in 2022: only Wuppertal in North Rhine-Westphalia and Halle (Saale) in Saxony-Anhalt remain among the major cities with the highest real rates of growth.

"The catch-up effects in the relatively affordable major cities of eastern and central Germany are largely over, prices are stagnating or declining," said Kuhn. "But good connections to the expensive metropolises of Düsseldorf and Cologne have driven demand in Duisburg, Leverkusen and the commuter town of Herne, for example. Long-term working from home continues to make relocation attractive."

In terms of the most dramatic price rises, the trendy city of Leipzig came top of all the bigger cities, with an impressive 12.4 percent price increase. The district of Bayreuth in Bavaria topped the charts for the steepest price hikes though: at the end of 2022, a property there was (on average) 22 percent more expensive than it was a year before.

This was followed by Ilm-Kreis in Thuringia (20.1 percent), Kulmbach in Bavaria (19.9 percent) and Aurich in Lower Saxony (17.7 percent). Prices in the popular holiday region of North Friesland along the North Sea coast also showed no sign of dropping anytime soon: here, they rose by an average of 8.2 percent in 2022.

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Where are the priciest places to buy property? 

Despite the real-terms drop-off in prices, Munich by far remains the priciest city in Germany, with homes here costing an eye-watering average of €9,774 per m2. 

Hamburg was the second most expensive metropolis, at €6,685 per m2, closely followed by Frankfurt am Main at €6,654 per m2. Prices in the capital have been catching up in recent years but at €5,904 per m2, they still remain a fair bit lower than in other major cities.

That said, the cheapest of the big seven was Cologne (€5,118 per m2) followed by Stuttgart (€5,416) and Düsseldorf (€4,454). 

Outside of the cities, by far the priciest region in Germany is North Friesland - a district covering islands like Sylt, Föhr and Amrum - where properties will set you back a whopping €9,185 per m2. Perhaps unsurprisingly, the next eight most expensive districts were all in Munich and the surrounding area, followed by Aurich - another popular holiday destination in Lower Saxony - in tenth place. 

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Where can people still get a bargain? 

According to Postbank, you can still find fairly low property prices in most parts of central Germany as well as in individual western and eastern border regions, but they are particularly low in many rural areas in Saxony-Anhalt, Thuringia and Saxony.

In 2022, buyers in the Mansfeld-Südharz district in Saxony-Anhalt, the Vogtland district in Saxony and the Greiz district in Thuringia astoundingly paid less than €1,000 per m2 to get their foot on the housing ladder.

In some cases, these low prices overlap with dramatic price increases last year: for example, property prices in the Ilm-Kreis district of Thuringia went up by 20 percent last year but still remain moderate at €1,898 per m2.