26.03.2024 • 5 min. reading time
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Still falling property prices in almost all smaller university towns
Germany's smaller university towns are often known for their charming, picturesque streets and vibrant, academic community. Whether it's the search for a pleasant study environment, the desire for a close-knit sense of community or simply the appeal of cultural and social life, more and more people have recognized the benefits of smaller university towns. Shaped by local characteristics and the influence of economic and social trends, however, the development of the real estate market in smaller university towns currently varies. Regardless of price declines, stagnation or price increases, all locations offer both challenges and opportunities. The VON POLL IMMOBILIEN experts have taken a closer look at the purchase price development1 of condominiums in smaller university cities2 in Germany in 2023 compared to 2022.
Daniel Ritter, Managing Partner at VON POLL IMMOBILIEN:
"While steady growth has been observed in the last decade, 40 of the 46 smaller university cities surveyed recorded a decline in real estate prices in 2023. This development can be attributed to the various geopolitical challenges of recent years. Only in some cities did prices rise or stagnate against the general trend, indicating local characteristics and possible market stability. This dynamic reflects the diverse influences shaping the German real estate market and underlines the importance of local factors and political measures in an increasingly complex market environment."
For those looking for a condominium in the smaller university towns, Constance has the most expensive prices per square meter at an average of €5,495/m2 (rental price: €15.17/m2). However, purchase prices for properties here fell by a whopping -10.3 percent in 2023 compared to 2022, making Constance one of the five locations where property prices have fallen the most. Property buyers in Potsdam also have to pay prices per square meter above €5,000 at €5,302/m2 (rental price: €12.26/m2), Freiburg im Breisgau at €5.281/m2 (rental price: €15.00/m2) and Tübingen at €5,191/m2 (rental price: €14.61/m2). In contrast, the purchase price trend compared to 2022 is very different: In Potsdam and Freiburg im Breisgau, prices fell by -7.8 percent and -4.8 percent respectively, while they tended to stagnate in Tübingen at -0.7 percent.
Fig. 1: Purchase and rental price development for apartments in smaller university cities in Germany, 2023 compared to 2022 (Graphic: von Poll Immobilien GmbH)
Andreas Güthling, Branch Manager at VON POLL IMMOBILIEN Potsdam and Werder (Havel):
"Potsdam as a sought-after residential location, UNESCO World Heritage Site and university city has also proven to be more stable than other cities during the correction of the real estate market. Nevertheless, there have also been price corrections here - even in very good locations - so that good buying opportunities are arising again here and there, especially for buyers who are not dependent on financing. However, as soon as the real estate market recovers, prices in prime locations will outpace the rest of the market. Buyers should first consider their financial options and set precise criteria for their property search. They should monitor the market and offers closely and take advantage of suitable buying opportunities. Sellers, on the other hand, should offer their properties at prices in line with the market, even if these are sometimes well below the prices of the boom years. The peak prices are the wrong benchmark for the current market situation and marketing errors lead to significantly longer brokerage times and higher price markdowns."
In contrast, condominiums are cheapest in the eastern German university cities of Chemnitz at an average of €1,320/m2 (rental price: €5.58/m2) and Magdeburg at €1,889/m2(rental price: €6.79/m2). Compared to the previous year, purchase prices in 2023 fell by an average of -6.9 percent in Chemnitz and -2.2 percent in Magdeburg.
Heike Hoffmann, branch manager at VON POLL IMMOBILIEN Magdeburg:
"Due to the rise in mortgage interest rates, modernization costs and inflation, the willingness of prospective buyers to buy has fallen. This reluctance to buy is particularly noticeable in the mid-price segment - demand is rather restrained. Nevertheless, the entire region is benefiting from the establishment of the semiconductor manufacturer Intel - starting with the creation of new jobs, which will also increase demand for real estate in and around Magdeburg. The trendy locations in Magdeburg include the entire south of the city. The Ottersleben district is of course particularly sought-after. Due to its proximity to the Intel plant, living there is likely to become even more popular in the future. Diesdorf, Reform and Alt Olvenstedt should also be mentioned. Magdeburg's top locations can be found in the city center, Stadtfeld, Buckau, Werder and Hopfengarten."
The cities of Wuppertal, Mönchengladbach, Hildesheim, Kaiserslautern, Saarbrücken, Siegen, Frankfurt (Oder), Coburg, Halle (Saale), Bielefeld, Erfurt, Flensburg, Kassel, Göttingen and Braunschweig are also in the lower rankings with prices per square meter for condominiums between €2,000 and €3,000. The price development compared to 2022 in this group is completely different. While property prices in Erfurt fell by -12.2 percent in 2023 compared to 2022 - the sharpest price decline in the entire ranking - they rose by 2.9 percent in Saarbrücken and tended to stagnate in Halle (Saale) at 0.3 percent.
With average purchase prices for condominiums averaging between €3.000/m2 and €4,000/m2 can be expected by potential buyers in the smaller university cities of Koblenz, Marburg, Passau, Bayreuth, Jena, Paderborn, Greifswald, Oldenburg, Kiel, Aachen, Giessen, Heilbronn, Trier, Rostock, Lüneburg and Lübeck. Here, too, a heterogeneous price trend can be seen in 2023 compared to 2022. While prices have fallen by more than 10 percent in Kiel (-11.8 percent), Heilbronn (-10.8 percent) and Bayreuth (-10.1 percent), they have risen by 7 percent in Paderborn, 5.4 percent in Greifswald and 1.5 percent in Jena in 2023.
Robert Rothböck, branch manager at VON POLL IMMOBILIEN Kiel, Plön, Eckernförde, Neumünster and Rendsburg:
"Due to falling demand, real estate prices have fallen in 2023 compared to 2022. Since the beginning of this year, however, demand has picked up again slightly, albeit at reduced prices. As a university city, Kiel also offers a lot of potential for one-and-a-half and one-bedroom apartments. However, fluctuation is somewhat higher for three- to five-room apartments. But larger apartments of 100 square meters or more are also interesting again. Many older couples are moving away from the countryside due to changing life circumstances and are looking for suitable living space in the city center. Prices will therefore stabilize again in the future. However, properties with a low degree of modernization will continue to be cheaper to buy, although properties with modern energy and furnishing standards are still in demand. Prospective buyers should therefore pay particular attention to the guidelines of the Building Energy Act in order to avoid high payments in the future."
It will also be more expensive for property buyers in Regensburg with an average of €4.839/m2 (rental price: €12.89/m2), in Erlangen at €4,772/m2 (rental price: €12.66/m2), in Heidelberg at €4,719/m2 (rental price: €14.64/m2), in Augsburg at €4.381 €/m2 (rent: 12.62 €/m2), in Darmstadt with 4,299 €/m2 (rent: 13.16 €/m2), in Ulm with 4,216 €/m2 (rent: 12.28 €/m2), in Bamberg with 4.141 €/m2 (rental price: €11.00/m2), in Mainz at €4,069/m2 (rental price: €13.40/m2) and in Würzburg at €4,001/m2 (rental price: €12.15/m2). However, prices fell quite sharply in Mainz (-11.5 percent) and Augsburg (-10.2 percent) in 2023 compared to 2022, while prices per square meter for condominiums in Bamberg rose by 3.8 percent in the same period.
Reverse trend: Rents rising in all smaller university cities
While purchase prices1 for condominiums in the smaller university cities2 fell in the majority of cases, rental prices1 for apartments rose in all of the locations analyzed in 2023 compared to 2022. In 23 out of 46 locations, rents rose by between 5 and 10 percent.
The most expensive average rents in 2023 were in Constance at €15.17/m2 and Freiburg im Breisgau at €15.00/m2, followed by Heidelberg at €14.64/m2 and Tübingen at €14.61/m2. Rents per square meter for rental apartments in Tübingen rose by 7.3 percent in 2023 compared to 2022 - making Tübingen the fourth most expensive of the smaller university cities. Constance is also among the leaders with a 6.7 percent increase in rents. In Freiburg im Breisgau and Heidelberg, tenants had to expect higher prices in 2023 by an average of 4.7 percent and 4.6 percent respectively.
The cheapest place to live for tenants in smaller university cities is Chemnitz at an average of €5.58/m2. However, average rents in Magdeburg and Frankfurt (Oder) were also very low in 2023 at €6.79/m2 and €6.95/m2 respectively. However, rents in Frankfurt (Oder) rose by 7.3 percent in 2023 compared to 2022, making the city on the Oder one of the five cities in the analysis with the highest price increases for rental apartments. In Chemnitz, on the other hand, the average rent only climbed by 1.6 percent - the smallest change compared to 2022 in the entire ranking.
Tenants in the smaller university cities of Halle (Saale), Wuppertal, Hildesheim, Mönchengladbach, Erfurt, Coburg, Siegen, Saarbrücken, Kassel, Flensburg, Paderborn, Bielefeld, Braunschweig, Kaiserslautern and Koblenz have to pay an average of between €7.00/m2 and €10.00/m2 for an apartment. At a whopping 9.7 percent, rents in Kaiserslautern rose the most of all the university cities analyzed in 2023 compared to 2022. Tenants in Wuppertal also paid around 6 percent more for an apartment in 2023 than in 2022. In Erfurt, on the other hand, rents only climbed by 2.8 percent - making Erfurt one of the five smaller university cities with the lowest rent increases in 2023.
Somewhat more for rental space - between €10.00/m2 and €12.00/m2 - is what those looking for apartments in the cities of Kiel, Greifswald, Rostock, Oldenburg, Passau, Aachen, Bayreuth, Jena, Trier, Göttingen, Lübeck, Bamberg, Giessen, Lüneburg and Marburg have to budget for. Greifswald and Jena stand out here with higher average rents of 7.7 percent and 7.4 percent in 2023 compared to 2022, making them one of the three locations after Kaiserslautern that recorded the highest price increases for rental apartments. In contrast, there was less change in rental prices within a year in Rostock and Kiel, with higher prices per square meter of just 2 percent and 2.6 percent respectively.
After the four aforementioned top performers in the ranking, the upper price level also includes Mainz at €13.40/m2, Darmstadt at €13.16/m2, Regensburg at €12.89/m2, Erlangen at €12.66/m2, Augsburg at €12.62/m2, Ulm at €12.28/m2, Potsdam and Heilbronn at €12.26/m2 each and Würzburg at €12.15/m2. In these locations, rents in 2023 have only climbed above the 5 percent mark compared to 2022 in Heilbronn (5.1 percent) and Augsburg (5.2 percent). Also surprising is Potsdam, where prices per square meter for rental apartments were only 2 percent higher on average in 2023 than in 2022, the second-lowest price increase of the cities analyzed.
All data and graphics may be used and published with a reference to the following source: von Poll Immobilien GmbH (www.von-poll.com). The graphic can be downloaded digitally with an embedding link here: https://www.datawrapper.de/_/EdyO3/
1 The data basis for the purchase price and rent analysis for condominiums is based on the average asking prices from GeoMap and VON POLL IMMOBILIEN Research (2024) for 2023 compared to 2022.
2 For the categorization of the German real estate market, VON POLL IMMOBILIEN uses BulwienGesa's classification of A, B, C and D cities. The cities were grouped according to their functional importance for the international, national, regional or local real estate market. BulwienGesa classifies 46 cities in the C and D locations with at least 7,000 students as university or college cities, whereby A and B cities are not taken into account due to the separate consideration.
