Munich – “A safe bet for investment?”
City overview
With offerings such as lush green parks, great geographical location and excellent infrastructure, it is no surprise that the capital of the state Bavaria, Munich, is the most expensive city in Germany. Thanks to great quality of life, safety (lowest crime rates in Germany), and international flair, Munich is an ideal place for people to work and live.
Munich currently has a population of more than 1.5 million people, more than 29% of the population have an immigrant background, and 50% of those are originally from other parts in the EU. And a total of 1.8 million people are expected to live in Munich by 2023. A relatively low unemployment rate, which currently stands at 3,9%, a high employment growth rate of 3% and a high share of employees that have at least one university degree have all fueled demand for housing. Munich has a vacancy rate close to zero and faces a shortage of 40,000 residential units.
Being the most important location for insurance and financial services companies (after Frankfurt), Munich has also become a fertile ground for startups. It has access to a large pool of young talented people, who are enrolled at the city's 17 universities or higher education institutions. Renowned institutes such as the Fraunhofer Society and the Max-Planck Society lead and support research and science activities in the region. Munich is home to some of Germany's largest companies, including BMW, Siemens and Allianz.
Real estate market trends & outlook
Residential real estate space in Munich remains in short supply and prices ranging from €6,000/sqm to €10,000/sqm. The average price for existing residential house or apartment units reached to €7,250/sqm (an increase of 8% year-on-year) in the first half of 2018. In some of the prime residential districts prices even reached an average of around €7,800/sqm. Property prices have been doubled between 2009 and 2018.
The average price of single-family homes reached €1.1 million, a 2.6% decline compared to 2016. Meanwhile, rental prices reached €19.25/sqm per month in first half of 2018, an increase of 5.0% year on year. The average rent increase in Munich has been roughly 3.8% p.a. since 2004. A 120 sqm apartment can rent for around €2,250/month, earning a yield of 3.5%. With high housing shortage in Munich, finding tenants for your apartment should not be much of a problem.
Munich has long been facing a major shortage of residential units. The vacancy rate is near zero. Thus, current and planned future building activities are very unlikely to meet the high demand. Such high supply shortages will likely drive property sale and rental prices upwards in the coming years, which makes Munich an attractive city for international real estate investors.
We work with multiple property listing pages and real estate agents to help you find your dream home. For instance, neubau kompass is a great website to use if you’re planning to buy real estate in Munich!
How prices are growing in
major German cities?
Germany's strong economic growth has resulted in price increases across German cities: On average the prices doubled in the last 10 years. Rents also follow the house price development in Germany: the average increase amounts to 50% between 2008 and 2018.
In Munich, the average annual property prices per square meter has increased from €2,800 in 2008 to €7,250 in 2018. Meanwhile, the average rent prices per square meter also increased from €11.50 in 2008 to €19.25 in 2018.
About us
LoanLink is a German mortgage broker that specializes in helping international clients access Munich real estate. Our Munich mortgage broker team is experienced, and walks clients through the process in English. With a strong technological platform, we can identify the best mortgage rates among 400+ regional and global German banks.
Our smart online mortgage platform guides you through the German mortgage process at any time of day or night. And, our mortgage calculator shows a complete picture of what your mortgage might look like. To make the process easy for non-German speakers, all resources are in English. Best of all, our service is free.
LoanLink is registered and controlled by the surveillance authority in Munich.
Got a question or a complex situation?
Our friendly home loan experts are happy to support you in finding a mortgage in Munich. Call us on +49 (0) 30 5683 7535 or email us at [email protected]
How it works
More information on mortgages in Germany
Can’t find what you’re looking for here? We’ve got more answers on our FAQs page.
When buying a property in Munich, you always have to pay for additional fees, such as real estate tax, real estate agent fees, notary costs etc. In Germany, real estate purchase fees may be up to 15% of the property’s purchase price. Similar to a downpayment, purchase fees should be covered by the buyer’s own equity instead of a bank mortgage. In Munich, the approximate additional purchase fees are as follow:
Real estate tax: 3.5%
Real estate agent fees: 3.57%
Notary costs: 2%
Total costs: 9.07%
For more information in regards to the additional fees you would pay when buying a property in Munich, please check out our mortgage calculators for a more accurate calculation.
First, the exact amount of your deposit depends on if you live and work in Germany.
I live and work in Germany:
You can borrow up to 100% of the property price. Overall, your deposit should cover the purchase fees, which will depend on the property’s location in Germany. Usually purchase fees are between 5-15% of the property price. Such fees include: stamp duty, notary fees and real estate agent tax.
I do not work in Germany:
Generally, you can borrow up to 60% of the property price. So, your deposit should cover 40% of the property purchase price as well as the purchase fees (5-15% of property price). As shown above, these fees include stamp duty, notary fees and real estate agent tax.
LoanLink’s mortgage affordability calculator is tailored to buyers of different residency status to work out how much house they can afford in Berlin. By simply inputting a few numbers, you will find out your maximum affordability within seconds.
As soon as your initial mortgage expires, you have two options. On one hand, you can choose to pay off the entire mortgage at once. Otherwise, you can refinance at current market interest rates with your current bank or a new lender. In most cases, refinancing with a new lender results in better rates for you.
We can help you to identify the best refinancing deal from 400+ partner banks.
As soon as you decide to buy, there are several good resources for locating a property in Germany. A few of the most common resources are the major residential real estate pages like immobilienscout24.de or immowelt.de.
Additionally, you can approach local real estate agents or the construction company. Also, please approach us. We have partners in Frankfurt, Berlin, Munich, Hamburg or Stuttgart who are ready to help.
Presently, KFW offers good interest rates for those who are planning to live in the house themselves or who are purchasing a newly constructed house or apartment ( KFW home ownership program or KFW energy efficient construction program).
property in Germany
Get the Loanlink guide of buying
property in Munich
Buying a home is complicated and stressful - even for German native speakers. We’ve created a comprehensive and easy to understand guide to buying a property in Germany: