Munich's Apartment Prices Lead Germany at €8,650/m² Amid Supply Shortage

Munich's Housing Market Tops Germany with €8,650/m² Prices

Munich has emerged as Germany's most expensive city for apartment purchases, with prices averaging €8,650 per square meter. This figure is approximately 50% higher than in Berlin and Hamburg, reflecting intense demand and a persistent undersupply of housing. The city’s real estate market remains highly competitive, driven by both local and international investor interest. Despite a slight correction in purchase prices, Munich's rental market continues to see growth, driven by a significant housing shortage and sustained buyer confidence fueled by eased borrowing costs. As the city faces a growing gap between demand and supply, this trend shows no signs of abating in the near term, compelling potential buyers and investors to strategize carefully in this challenging market landscape.

Munich's Real Estate Market: A Breakdown of Current Prices

According to Investropa, Munich's real estate prices for existing apartments average between €7,500 and €8,476 per square meter as of mid-2025, marking a slight decline from previous years. New builds command even higher prices ranging from €10,050 to €11,454 per square meter. Prime central districts such as Altstadt-Lehel and Schwabing see prices exceed €10,000 per square meter, while more affordable options are available in peripheral areas like Trudering, where prices range from €6,500 to €8,000 per square meter. This price structure underscores the disparity between central and peripheral locations, emphasizing the importance of location when considering property investments in Munich.

Germany's Housing Crisis: Implications for Major Cities

Germany is currently grappling with a significant housing crisis, necessitating the construction of at least 320,000 new apartments annually. However, only 216,000 building permits were issued in 2024, the lowest since 2010, as reported by International Investment. This construction deficit is profoundly affecting major cities including Munich, Berlin, Hamburg, and Frankfurt. Administrative delays in building approvals exacerbate the issue, often stalling progress for years. As a result, rental rates across Germany have increased by 6.38% over the past year, with Munich experiencing some of the most significant changes in rental affordability.

Investment Opportunities in Munich Amid Market Stability

The German real estate market remains one of the most stable and attractive in Europe, drawing global investors, as noted by Finance for Expats. Munich, in particular, continues to maintain its status as a premium location, with property prices in prime locations often exceeding €10,000 per square meter. This stability, combined with the city's economic strength and cultural appeal, makes Munich a coveted destination for property investment. Despite high prices, investors are drawn by the potential for long-term capital appreciation and rental yield, especially as mortgage rates become more favorable.

Stakeholder Perspectives: Addressing Munich's Housing Deficit

According to a study by the Pestel Institute, detailed in The Munich Eye, Munich faces a shortfall of 74 homes per 10,000 residents—nearly double the national average. This severe housing deficit calls for urgent policy shifts and increased government support to accelerate residential construction. Experts suggest that strategic urban planning and incentivizing private developers could help alleviate some of the pressure. Maya Tarek, Senior Analyst at RealEstateAbroad.com, states, "Addressing Munich's housing shortfall requires collaborative efforts between public and private sectors to enhance construction efficiency and affordability."

Munich faces a shortfall of 74 homes per 10,000 residents—nearly double the national average.

Future Implications for Munich's Real Estate Market

Looking ahead, Munich's real estate market is poised for continued growth, albeit with challenges. As highlighted by Mordor Intelligence, the German residential market is projected to expand to USD 885.09 billion by 2030, reflecting a 4.14% CAGR. Munich will likely remain a focal point for both national and international investors seeking stable returns in a fluctuating global market. However, the city's ability to attract investment will depend heavily on addressing its housing deficits and maintaining economic stability. RealEstateAbroad.com analysis suggests that investors should remain vigilant of regulatory changes and evolving market dynamics to capitalize on Munich's promising yet complex real estate landscape.

City	Average Price (€/m²)	YoY Change	Key Factors
Munich	€8,650	-5%	High demand, low supply
Berlin	€5,767	+3%	Strong investment interest
Hamburg	€5,767	+2%	Economic growth