2023-05-24 14:23:00
Cologne, Bonn, Munster, Dusseldorf – if you ask yourself where the greatest potential for real estate value appreciation lies in the next few years, you will of course come across the large university cities in North Rhine-Westphalia. The Hamburg Institute for the World Economy (HWWI) came to no other conclusions, which predicted the value developments for the Postbank Housing Atlas 2023.
But behind Cologne, Münster and Düsseldorf comes Paderborn first. The city in East Westphalia is a symbol of what HWWI study author Dörte Nitt-Drießelmann describes as follows: “There, disposable income will increase by 2035, one of the fastest in North Rhine-Westphalia, the decline in population and employment is comparatively small. High disposable income drives purchasing power, demand for real estate and thus prices.”
Overall, however, according to the forecast, prices for condominiums will fall in real terms in almost half of all 400 German administrative districts and urban districts. According to the study, by 2035 they will be at least two percent below today’s level. At least mind you. In many places, the minus might be significantly higher. Regions such as Krefeld, Mönchengladbach and the district of Viersen are also losing slightly, which can also mean cheaper real estate purchases for future generations of buyers. If you disregard the currently horrendous interest rates and the high construction costs.
On the other hand, the experts are forecasting a real increase in purchase prices of more than 0.15 percent per year for 43 percent of the regions up to 2035. Although these are of course always average values, it is clear that even within a city or a district, the The price gap sometimes differs significantly.
Düsseldorf is definitely above average. If you extrapolate the annual forecast of the HWWI, you get a price increase of more than ten percent for the state capital by 2035. In North Rhine-Westphalia’s only metropolis, Cologne, the potential for growth is twice as high, with the expected annual growth rate exceeding 1.5 percent. This puts the cathedral city in third place among the seven largest German metropolises, behind Munich (around two percent annually) and Frankfurt (1.93). Dusseldorf is sixth. However, the top seven are not the only regions where rising prices are expected. This also includes Dresden, Mainz, Darmstadt and Freiburg, some regions in the suburbs of the NRW metropolises such as the Rhein-Erft district, the Rhein-Sieg district and Coesfeld, but above all Potsdam and Leipzig and the district of Erding. With growth rates well above two percent, the latter three even outperform Munich.
At the other end of the scale, if you look at NRW, are regions such as the Märkische Kreis, the cities of Herne, Hagen, Gelsenkirchen and Remscheid, which would lose between 1.3 and 2 percent per year. For those who came last in this study, the chance that significantly lower prices might make them more attractive for immigration would be slim: “People go where the work is. And then they want a reasonable infrastructure, an attractive range of cultural activities, good day-care centers and schools for their children,” says Nitt-Driesselmann – and thus summarizes the requirement profile that a region needs for real estate to increase in value. Above all, the infrastructure is extremely important in times like these: “With a view to the climate change, rail transport in particular must be improved,” says the HWWI expert. However, such structural changes usually lasted several decades.
During this time, some regions have probably missed the connection almost permanently. Outside of North Rhine-Westphalia, apart from Leipzig and Potsdam, this applies to some regions in eastern Germany, among others. Losses in the value of real estate threaten in structurally weak regions with declining population numbers, which would be expected for many regions in Saxony-Anhalt, Thuringia, Saxony, Mecklenburg-Western Pomerania and Saarland, writes the Postbank. Such areas might perhaps score with increased investments in tourism, which might possibly attract workers and thus make the region more attractive for living. Or as a retirement town where the cost of living for retirees is lowest.
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