In Frankfurt is well earned. The average annual gross income is almost 51,000 euros, three percent more than the average in Germany. Nevertheless, it is becoming increasingly difficult for many employees to finance an apartment. This is not only due to the recent sharp rise in interest rates and inflation, but also to price developments in recent years. Today, a condominium costs on average 2.3 times as much as in 2012. Incomes cannot keep up.
The consulting company ImmoConcept has analyzed the Frankfurt market in detail based on advertisements in the most important real estate portals on the Internet. According to this, average purchase prices of more than 10,000 euros are now being asked for in seven of the 42 districts examined. These include districts known to be high-priced, such as Nordend and Westend, as well as the old town and the station district. Districts like Sindlingen, where an apartment is still available for 5,400 euros per square meter, are the exception. In all parts of the city, purchase prices have risen by three percent compared to the previous year. Harheim, Heddernheim, Nordend-Ost and Bornheim recorded the highest increases.
Top prices are demanded in the high-rise residential buildings. The penthouse in the Grand Tower on the Skyline Plaza, the tallest residential building in Germany, is being offered for 30,000 euros per square metre. An apartment has already been sold for this price in the “160 Park View” high-rise at Grüneburgpark. However, ImmoConcept sees a declining demand in such price ranges – also because of the often exorbitant additional costs. The “transshipment speed” has dropped. In other words, it takes much longer for a high-priced apartment to be sold. In individual cases, investors would already “pull the ripcord and put their projects on hold,” said ImmoConcept Managing Director Bernd Lorenz. He spoke of “problematic marketing”. Foreign investors are hard to find and the market is saturated.
Soaring sales prices stopped for the time being
This does not only apply to the luxury segment. Overall, real estate sales in July fell by around twelve percent compared to the previous year. In the case of one- and two-family houses, the decline is even 29 percent. ImmoConcept sees the unchecked soaring of purchase prices at least for the time being. However, Lorenz does not expect prices to fall. “If new construction activities come to a de facto standstill, existing properties could become more expensive,” he suspects. The level is already high, even for older apartments, ranging from around 3,800 euros per square meter in Sindlingen to more than 9,000 euros in the southern Westend. In a ten-year comparison, the strongest increase was in existing apartments in Griesheim (plus 139 percent). At around 4,600 euros per square meter, however, the level is still comparatively low.
According to the study, rents have risen less than purchase prices. On average, a surcharge of 36 percent was determined in Frankfurt over the past ten years. However, average income growth over the same period was only half as high. The proportion of the salary that has to be spent on rent is increasing.
The rent increases were strongest in two parts of the city: In Fechenheim and in the Riederwald, an average of 41 percent more rent is due today than ten years ago. On the other hand, the price level there is relatively moderate with rents of EUR 11.46 and EUR 12.41 per square meter respectively. No comparison to Westend-Süd, where existing rents are already on average 16.30 euros and for a new apartment in the middle price segment 20.85 euros must be expected. ImmoConcept has calculated what that means for a three-person household that lives in 90 square meters and does not want to spend more than 30 percent of its income on housing costs. In the West End, a net household income of more than 7,000 euros would be necessary. Even in Sindlingen, a district with comparatively moderate rents, 4900 euros are necessary for this.
Lowest price in suburban locations
In relative terms, new-build apartments are currently the cheapest in Sossenheim at €13.87 per square meter. Harheim (13.89 euros), Sindlingen (14.02 euros) and Nieder-Erlenbach (14.19 euros) follow. For existing apartments that are newly rented, bargains are still possible in Sindlingen (10.75 euros), Harheim (10.77 euros), Sossenheim (10.90 euros) and Nieder-Erlenbach (11 euros). In these parts of the city, prices are sometimes 50 percent lower than in central locations such as Westend, downtown, Nordend, Bahnhofsviertel and Sachsenhausen.
According to the analysis, the increase in existing rents has accelerated somewhat compared to the previous year. In 2021, the Gallus was at the top with an increase of 3.25 percent year-on-year, this year Bornheim leads the list with an increase of 4.16 percent. Nordend-Ost, Ostend, Unterliederbach and Seckbach are also over 3.5 percent. In Bergen-Enkheim, Hausen and Praunheim, the increase was less than 2.5 percent.
Due to the price development in Frankfurt, ImmoConcept estimates that there will be more evasive movements to the surrounding area. Bernd Lorenz suspects that this will also lead to increases in rents and purchase prices there. But whether real estate prices will be revalued in the long term depends on politics, the European Central Bank and economic developments.