Whether you are looking for an investment property or a place to live, it’s crucial to know where buying real estate makes sense in Germany. In some cities, you will never get your invested money back, while in some, purchasing a house or an apartment is a great deal.
Some of the best places to buy property in Germany include cities like Lüneburg, Fürth, and Wolfsburg, among others. Buyers will get the best returns on investments. Major German cities like Berlin and Munich are top-rated when it comes to buying a home but have high property prices and low returns.
When buying a house or an apartment in Germany, you should consider many things where the location is by far the most crucial factor. If you are planning to live in that house, you should also like the city where you are buying a property. Moreover, connectivity to main cities, airports, and all necessary infrastructure must be taken into account.
Where is the best place to buy property in Germany?
Location is the most important factor to consider when buying a property, and Germany isn’t an exception. If you are looking for an investment property, location and proximity to infrastructures like the subway, shops, and fast access to the city center play a crucial role.
If you are buying a place for yourself, thus, to live there, these factors are less crucial but still should be considered. You probably don’t want to live middle of nowhere.
If you are looking for the best return on your investment Pforzheim, Kaiserslautern and Lüneburg offer the most attractive conditions for buyers of existing apartments in Germany.
These cities resulted from “Risk-Return Ranking 2020” made by the consulting firm Dr. Lübke & Kelber. The study compares the investor risk and the possible returns.
If a newly built house is your goal, look into these Bavarian cities:
Best places to buy real estate in Germany according to the studies made by McMakler:
|Rang||City||Price for m² (EUR)||Rent price (EUR)||Buying factor|
This map indicates where the future real estate trends are more positive and where buying a property brings the highest risk in the future. Red color means very high risks and green – excellent future developments.
Best places for the return on investment
An investment is only worthwhile if the rental income pays off the purchase price. Houses in some German cities are prohibitively expensive (like Munich), making almost no chance of getting your money back.
Medium-sized university towns, on the other hand, offer attractive returns for buyers. A company McMakler has evaluated 46 cities in terms of the best return on your money. The analysis had shown that only in 26 cities the investment in residential real estate financially makes sense.
Therefore, if you want to get a return on your money, looking into smaller off-radar cities is a better idea. Here is the ranking:
At the same time, in 2019, the real estate platform Immowelt did its own research and finalized the cities with the best return on investment when buying properties:
Here are the best cities to buy real estate if you want to get a maximum return on investment:
Which German cities and regions are the best?
1. North Rhine-Westphalia
Existing houses are easy to find in North Rhine-Westphalia. There are plenty of already built homes in this region, and it’s the most populated state. Your best bet will be cities like Cologne and Düsseldorf. NRW has an important industrial location, so apartments are in demand even in the suburbs and countryside.
Dresden or Leipzig are beautiful cities in Saxony but also worth looking for an investment. You certainly will benefit from great home prices and lucrative returns.
High returns might bring high risk; some places in Saxony have high vacancy rates, where people tend to leave and move to other locations. Therefore, a solid market analysis will be required from your side.
Saxony is one of the cheapest places to buy a property in Germany.
3. South of Germany
Baden-Württemberg and Bavaria are the most expensive regions for home buyers. Real estate prices are constantly increasing due to the strong economic power, stable growth, and high demand.
In the south of Germany, the best place to buy a home is the city of Constance. The prices are high, but the return on investment should be good. Besides, Landshut and Regensburg are on the list of the lowest-risk cities.
The average price per square meter in southern Constance is 5,368 EUR. It’s the most expensive university city in Germany, followed by Freiburg im Breisgau (4,831 EUR), Tübingen (4,625 EUR), and Regensburg (4,606 EUR).
If you want to buy a place to live yourself, check out smaller cities like Kempten in Allgäu (67,000 inhabitants) and Bamberg (75,000 inhabitants).
Popular places to buy real estate in Germany
Despite being not “the best,” here are the most popular cities among German property buyers:
The home prices are the highest in the Bavarian capital Munich, yet, the purchasing power is also the strongest. This city offers the best quality of life and economic climate in the country. Despite moderate returns, it’s many Germans’ favorite place to buy a house or apartment.
An apartment or house in Hamburg is a future-proof investment. Hamburg is a bustling logistic hotspot for the entire Europe. It has excellent infrastructure and economic situation.
Leipzig’s economy and the population are growing, thus, attracting more and more buyers. Besides, it’s a student city; hence, your apartment won’t be empty. Moreover, the competition is still low; thus, buyers can find attractive apartments in older and historic buildings.
The price for condominiums is more affordable than in overpriced locations like Munich.
Cologne is Germany’s cool city. It hosts the largest carnival, attracting thousands of visitors every year. Besides, the city is popular among tourists. Therefore, many buyers invest in properties there.
Cologne has clear advantages: while in Munich you have to spend around 49% of your income to finance an apartment, in Cologne you only need 30%. Nonetheless, you can expect good returns and increases in value.
Consequently, major urban areas are the most popular places to buy a house in Germany. If you consider real estate in large cities such as Munich, Cologne, or Hamburg, you will be able to rent it at a reasonable price and benefit from a property with stable value.
Economically strong areas have a low vacancy risk; thus, you will always have tenants.
Nonetheless, properties in popular cities come at high prices and competition among investors.
How to become a landlord in Germany? Read in this guide.
Buying a home in Berlin
Berlin is one of the best places to buy property in Germany. If you are looking for a fast-moving life and rapid growth in all aspects – this place is for you.
The property prices are increasing, but so is the demand. Soon, Berlin might become one of the most desirable cities to live in Europe.
Real estate in Berlin is great for both – investment, buy-to-let, and living yourself. Besides, Berlin isn’t the most expensive place to buy a house in Germany; it’s in the fifth spot with an average price per square meter of 5,600 EUR.
As a general rule, prices are lower in smaller towns near the major German cities; they also have the best risk-return ratio. No surprise that all major German cities are attractive for property buyers, but the prices and competition is severe there.
Cheapest places to buy a property in Germany
The survey made by McMakler found the lowest buying prices in cities like Saarbrücken, Chemnitz, and Kaiserslautern. Home prices in these smaller university towns are less than 2,000 EUR per square meter.
The cheapest place to buy is Chemnitz, with an average price per meter of 1,270 EUR, followed by Saarbrücken with 1,813 EUR.
Cities with rapid growth
Significant growth in housing prices has been seen in these locations:
- Munich area (Bavaria)
- Munich (Bavaria)
- Ingolstadt (Bavaria)
- Erlangen (Bavaria)
- Heidelberg (Baden-Württemberg)
- Münster (North Rhine-Westphalia)
- Freising (Bavaria)
- Regensburg (Bavaria)
- Ebersberg (Bavaria)
- Stuttgart (Baden-Württemberg)
Price vs value
If you are looking for the best price-per-value ratio, here is an overview of various cities and the average size of the apartment you can afford to buy. Into consideration was taken a mortgage rate of between 800 EUR to 1,000 EUR per month. This translates to a loan of about 270,000 EUR.
Dortmund housing market offers the best value for money for apartments. For between 217,000 EUR and 272,000 EUR, buyers can get a place of about 99 square meters on average. This means that it offers the largest living space in a city comparison.
In the major German cities, the situation looks different. In Munich, with the same budget, you will barely afford a studio with 33 square meters. In Frankfurt, Berlin, Stuttgart, and Hamburg, you will get a one-bedroom apartment for 270,000 EUR. See the complete overview below.
How big of an apartment can you afford to buy in Germany when paying between 800 to 1,000 EUR monthly mortgage rate?
|City||Size of the apartment (square meters)|
|Offenbach am Main||68|
|Freiburg im Breisgau||62|
|Frankfurt am Main||54|
Consequently, the highest prices to buy an apartment in Germany are in the country’s south and major cities. You will need to pay very high mortgage rates to afford a large enough home there.
Buying or renting: what is better in Germany?
Most Germans are renting, not buying. There is a reason for this. In large cities, renting a place is cheaper than buying it, even if you rent all your life.
House prices in cities like Munich, Berlin or Hamburg are so high that you won’t make your money back when buying a property there. This rule also applies to smaller cities, like Freiburg, for example.
To determine whether it’s better to rent or buy, you need to do detailed market research in a particular city and region.
Moreover, a company Dr. Lübke & Kelber found out that buying a home financially makes sense only in 35 citied out of 111 that were analyzed. You will be better off just renting an apartment or house.
In addition, the number of profitable locations is decreasing year after year. Soon, there won’t be any German city where buyers make profits on their investments.
If you are looking for new construction, buying a property is cheaper than renting only in the following German cities:
- Frankfurt (Oder)
Lastly, out of all the large cities in Germany, only Stuttgart is a good location for investing in existing homes. Prices are high, but the yields are at a reasonable level due to the high rents.
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