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In German cities, the price differences between city centers and outskirts are decreasing. The reason for this is that prices in city centers have recently fallen much more sharply in relative terms. During the boom years, central locations had benefited more than average. However, the price spread between the cheapest and most expensive neighborhoods in German cities remains very high. This is shown by the latest evaluation of the German Real Estate Index GREIX on property prices at neighborhood level in 2024. The GREIX is a joint project of the local expert committees for property values (Gutachterausschüsse für Grundstückswerte), ECONtribute, and IfW Kiel based on notarized sales prices.
In the case of apartments, central and non-central locations are again converging in terms of price. The premium that buyers pay for apartments in central locations in major German cities has fallen.
Most recently, buyers paid a price premium of 1,110 euros per square meter for apartments in city center locations. During the price upswing between 2012 and the first quarter of 2022, it was 1,220 euros.
Prices have converged the most in Hamburg. In the city center, house prices have fallen by 17.8 percent since 2022, while in the outskirts they have fallen by 11.8 percent, about 6 percentage points less. This is followed by Düsseldorf, where prices in central locations have fallen by 17.5 percent, more than 5 percentage points more than in non-central areas at 12.4 percent.
"Real estate buyers are more hesitant about the price premium for prime city center locations," says Jonas Zdrzalek (https://www.ifw-kiel.de/experts/jonas-zdrzalek/), real estate expert at the Kiel Institute for the World Economy, "this may have to do with changes in housing requirements and commuting in home office times."
Year-over-year: Rising prices, especially in less central locations
A year-over-year comparison of 2024 vs. 2023 shows correspondingly large differences in the price performance of apartments in the seven largest German cities (Berlin, Düsseldorf, Frankfurt am Main, Hamburg, Cologne, Munich, Stuttgart).
While house prices fell nationally, they rose in some districts, in some cases significantly, especially in the outer neighborhoods.
The strongest price increases were recorded in Düsseldorf Bilk-Oberbilk (+11.6%), Frankfurt Mitte-Nord (+8.9%), and Hamburg Harburg (+7.6%). The sharpest price declines were recorded in Hamburg Mitte (-16.5%) and Düsseldorf Altstadt-Stadtmitte (-10.4%).
Significant price differences between districts in Hamburg, Cologne, Berlin, and Frankfurt
Although the price premium for central locations is falling, there is still a large difference between the most expensive, often central and cheapest neighborhoods in many German cities. With a premium of more than 80 percent, it was among the highest in Cologne (Innenstadt 5,600 €/m2 vs. Chorweiler 3,000 €/m2) and Frankfurt (Westend/Innenstadt 7,10 0€/m2 vs. West-Autobahn 3,800 €/m2).
Prices were closest in Stuttgart (Mitte-Nord 5,300 €/m2 vs. Neckar-Ost 3,600 €/m2). However, the premium in 2024 was still almost 50 percent.
"The rise in interest rates since 2022 may have led buyers to look for riskier but higher-yielding properties outside the city centers," says Jonas Zdrzalek, real estate expert at the Kiel Institute for the World Economy, "in addition, fewer buyer groups may simply be able to afford expensive city center apartments due to inflation-related real wage losses."
Major cities: Cheapest neighborhoods in Cologne
In almost all 7 German metropolitan areas, there are neighborhoods where prices per square meter are lower than the GREIX average of the 20 cities and regions investigated—so buyers can find alternatives to expensive and very popular locations. The only exception: Munich.
Here, even in the cheapest neighborhood of Moosach-Milbertshofen, the price per square meter in 2024 was higher than in the most expensive neighborhood of any other major German city, at around 7,500 euros per square meter. In Munich's most expensive neighborhood, Altstadt-Maxvorstadt, the price per square meter was around 11,300 euros.
Outside of Munich, the most expensive neighborhoods are in Hamburg, Frankfurt, and Berlin at around 7,000 €/m2. The cheapest neighborhoods in Germany's major cities are in Cologne, with apartments in Chorweiler, Porz, and Kalk costing around 3,000 €/m2.
Read full report now: Greix – Prices in central locations fall particularly strong during downturn since 2022 (https://www.ifw-kiel.de/publications/greix-prices-in-central-locations-fall-part...)
Methodological note
The price development of the GREIX is calculated as an index. This is the only way to use statistical methods (hedonic method) to eliminate distortions that would otherwise occur with average prices per square meter. For example, the sale of a particularly large number of high-priced properties, for example due to a high number of square meters, good location, or good condition, leads to rising average prices per square meter, but such an increase is not based on a general increase in the value of properties. The formation of the index means that there is no upward or downward distortion in the price trend due to specific characteristics of the properties sold.
About the GREIX:
• What is the GREIX?
The GREIX is a real estate price index for Germany based on the sales price collection of the local expert committees, which contains notarized sales prices. It tracks the price development of individual cities and neighborhoods back to 1960 and is based on more than two million transaction data. The dataset can be used to analyze long-term trends in the real estate markets and to place current developments in a historical context.
• What data and methods are used to create the indices?
The data collection and evaluation take place in cooperation with the local expert committees. All real estate transactions are recorded in full. The price development is calculated according to the latest scientific standards and statistical methods (hedonic regression method). The GREIX thus stands for the highest scientific data quality.
• Who finances the GREIX?
GREIX is financed by public funding and is a project of the Bonn-Cologne Cluster of Excellence ECONtribute, which is funded by the DFG, and the Kiel Institute for the World Economy, in cooperation with the local expert committees. Its aim is to increase price transparency in the real estate market. Different price indices for 20 cities and regions are freely accessible at www.greix.de (https://www.greix.de/). Additional cities will gradually be added to the data set.
Media Contact:
Mathias Rauck
Chief Communications Officer
T +49 431 8814-411
mathias.rauck@ifw-kiel.de
Kiel Institute for the World Economy
Kiellinie 66 | 24105 Kiel | Germany
Chausseestraße 111 | 10115 Berlin | Germany
T +49 431 8814-1
E info@ifw-kiel.de
www.ifw-kiel.de
Jonas Zdrzalek
Kiel Institute Researcher
T +49 160 982 72 770
jonas.zdrzalek@ifw-kiel.de
Ratio central/non-central city districts
Largest price increase city districts
Ratio most expensive/cheapest city district
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