The tight real estate market does not always make it easy to find accommodation in the Bavarian capital. Finding an affordable apartment sometimes seems impossible. Especially if you are moving to Munich from another city, you may wonder what options are available. Mr. Lodge gives you an overview.
Table of contents
- Renting or buying an apartment in Munich?
- Advantages of buying an apartment in Munich
- How to buy an apartment in Munich
- Financial aspects of buying an apartment in Munich
- Advantages of renting an apartment in Munich
- When time is of the essence: Temporary living in Munich
- Is it easy to find an apartment in Munich?
- FAQ
To answer this question, it is advisable to compare the standard market rents with the financing costs of properties for sale in Munich. We also look at the option of temporary living, which is necessary if you need to move quickly.
Properties for sale have become cheaper in Munich. Anyone deciding to buy in Munich today will find slightly cheaper offers than in previous years, as prices have fallen by 10-20% depending on the segment and location. However, the biggest challenge is to find a suitable condominium in the city area of Munich.
Although the supply has recently increased, affordability is still a challenge due to the rise in interest rates. The purchase price for a second-hand condominium is around 9,000 euros per square meter.
You can find out how real estate prices have developed in our market report for Munich and the surrounding area.
If you want to use the apartment yourself, you benefit from the following:
- Sustainable investment: Munich is a city with a high quality of life. It offers a good infrastructure, green parks, cultural attractions, a diverse gastronomic scene and an attractive business location. A condominium is therefore a good investment in an attractive real estate market.
- Reducing dependencies in the rental market: Anyone who owns a condominium in Munich is not exposed to the increasingly expensive Munich rental market. In a condominium, you can also help shape upcoming energy decisions.
- Flexibility: If you no longer live in the apartment yourself, you can rent it out easily. The resale prospects will also remain at a comparatively high level despite the current fall in prices.
If you would like to buy an apartment as an investment in Munich, you have the following advantages:
- Value appreciation: Even though property prices have fallen recently, the real estate market in Munich is known for its long-term value retention. This is due to the high demand for living space and the limited supply. If you buy an apartment in Munich, you therefore have a good chance of seeing a return on your investment. Now that purchase prices are lower, there are good opportunities to find a suitable investment property.
- Stable rental opportunities: Munich has a high demand for rental apartments due to the large number of workers, students and continuing immigration.
- Attractive yields: Due to high rental demand and appreciation, apartments in Munich can provide good yields.
- Long-term stability: Munich is an attractive business location and has a solid labor market structure. The city is home to many large companies, including international corporations, and thus offers good economic stability. This contributes to the general stability of the real estate market and increases the attractiveness of apartments as a long-term investment.
However, it is important to note that the real estate market in Munich also presents some challenges. It can be difficult to find a suitable apartment. It is therefore advisable to research the market thoroughly before buying an apartment. At Mr. Lodge, we are very familiar with the Munich real estate market thanks to our many years of experience and know when an apartment is worthwhile for owner-occupancy or as an investment.
Clarify financing
Before you set out to find an apartment in Munich, you should first assess your financial situation and make sure that you have sufficient equity or a suitable financing option.
Check your credit score to determine how much you can afford and what your budget is. Consider not only the purchase price, but also the ancillary costs of the property as well as incidental purchase costs such as land transfer tax, notary and estate agent fees. This is a decisive factor, especially in the Munich real estate market.
Let a financing expert advise you on this. We at Mr. Lodge can recommend independent financing experts to you. Once all the general conditions have been clarified, have your lending institution issue you with a financing confirmation. Sellers will then see that you are serious.
Viewing
You can then start your search. If you find an apartment in Munich that matches your search criteria and your budget, arrange viewing appointments with the estate agent or owner. Take your time: on the one hand in advance to think about critical questions, on the other hand during the viewing itself to take a close look at everything. Don't just look at the apartment, but also at the condition of the building.
Due diligence: due diligence
As soon as you have found an apartment that meets your requirements, you should carry out what is known as due diligence. Check the legal and financial aspects, such as land register excerpts, ownership structure, building permits and any encumbrances on the property. This is particularly important for real estate investments. It may be advisable to consult a lawyer or notary to assist you with this process.
Purchase contract
If you are satisfied with the results of the due diligence, you can have the purchase contract for the apartment checked. The purchase contract should include all relevant conditions, prices, payment terms and legal provisions. Again, it is advisable to consult a lawyer or notary to review the contract and protect your interests.
Conclude financing
Even before the purchase contract is signed, you need to finalize the financing. If necessary, make sure you have the required financing documents and conclude the loan agreement with your bank.
Handover and transfer of ownership
As soon as the notary appointment and transfer of ownership have been completed, a handover date will be agreed. The handover, when you receive the keys to the apartment, completes the purchase process. Make sure that all agreements in the handover process are fulfilled.
Financial aspects of buying a home in Munich
When financing an apartment in Munich, there are several aspects you should pay attention to:
Equity
It is advisable to have sufficient equity before you finance an apartment in Munich. A high equity ratio can help you to obtain more favorable loan conditions and reduce the risk. As a rule, it is recommended that you contribute at least 20 percent of the purchase price as equity.
Budget planning
Make sure you plan your budget thoroughly and take your financial capacity into account. Consider not only the monthly mortgage payment, but also other associated costs such as interest, repayments, service charges, maintenance and insurance.
Compare mortgages and offers
Carry out a comparison of the various mortgage interest rates and conditions. Examine the offers from various banks and financial institutions to obtain the best possible conditions. Pay attention to the APR, the term, the repayment options and any fees or ancillary costs.
Financing confirmation
Before you buy a home, it is advisable to obtain a financing confirmation from your bank or financial institution. This confirmation shows sellers that you have sufficient funds to complete the purchase. This can help you to strengthen your negotiating position and speed up the purchase process.
Interest rate development
Pay attention to current interest rate trends and possible changes in the future. We are currently experiencing how interest rates can change over time. You can opt for a fixed interest rate, which keeps interest rates constant over the entire term of the loan, or a variable interest rate, which adjusts to the market. In the case of very high interest rates, this can be a good way to save money when interest rates go down again. However, you should always keep an eye on interest rate developments. For example, if it becomes apparent that interest rates will rise, it is advisable to switch to a fixed interest rate beforehand. However, you should always seek advice on this from an independent financing expert.
Subsidy programs
Find out about possible subsidy programs or support for buying a home in Munich. There are various government programs that promote the purchase of residential property, such as the KfW subsidy. Check whether you are eligible for such programs and what advantages they offer.
Advantages of renting an apartment in Munich
Anyone who is currently unable to buy an apartment in Munich due to the high financial burden will turn to the rental market.
As a rule of thumb, if the monthly installment minus repayments is significantly higher than the monthly rent, it makes more sense to rent an apartment in Munich than to buy one.
In a dynamic market phase coupled with a high purchase price level, as is currently the case in Munich, many property seekers decide to opt for a rental apartment until either sufficient equity has been saved or the affordability of properties for sale has improved.
The temporary living model then offers clear advantages to high earners, because furnished apartments with a fixed-term tenancy agreement are available more quickly than unfurnished apartments with open-ended tenancies.
When time is of the essence: Temporary living in Munich
Temporary rental offers are not linked to the Munich rent index. This is why the prices per square meter are higher here compared to permanent tenancies.
In addition, the apartments are already equipped with everything you need to move in straight away.
This is a great advantage, especially for people who are moving to Munich and do not have enough time for an intensive apartment search. They can get to know the city and decide on their favorite location at a later date.
Once they have found their new home, they can then take their time to look for an apartment that meets their needs and requirements.
The city is experiencing a steady influx. Both internationally and throughout Germany, Munich is a sought-after place to live and work. As a result, demand for real estate has outstripped supply on the market for years. This is particularly true in the rental market. For this reason, it is really difficult to find an apartment in Munich. Even if, objectively speaking, an applicant meets all the criteria, they still have to compete with almost 100 other applicants.
Many vacant apartments are passed on under the table and do not even find their way onto public real estate portals. Landlords who offer their property in this way often remove it from the platform after a short time: the flood of interested parties is simply too great.
If the property seeker is also under time pressure to find a suitable property - possibly even in a certain neighborhood - this is considered an almost unmanageable challenge in Munich.
Suggestions on how to find a home in Munich:
- Create a search profile with major Munich real estate houses like Mr. Lodge. This way, you will be the first to find out about apartments that are tailored to your needs
- Get active and put up notices with your apartment search on the notice boards of supermarkets, bakeries, butchers or simply on advertising pillars throughout the city or in your preferred neighborhood. Ideally with contact details that you can simply tear off and take home with you.
- Advertise in local newspapers and place ads in magazines that suit you and your lifestyle.
- Real estate portals such as IS 24 or ebay are important platforms for your search.
- Buy shares in housing cooperatives. Although an initial investment is necessary here, the apartments are usually affordable and most of them are in good condition. There are no notices of termination for personal use here.
- Get in touch with property management companies. You may be lucky and there may be a vacant apartment somewhere that has not yet been let!
- Use the possibilities of social media. Publicize your search on Facebook, Instagram, Twitch, Xing and LinkedIn.
- Gather all the necessary documents well before the viewing appointment. The employment contract, the last three salary statements, a copy of your ID card, a current SCHUFA statement and a form that provides information about yourself, including your job title, home address and hobbies.
- Prepare your application documents in such a way that your portfolio immediately catches the eye and gives you a competitive advantage. How about an application folder in red with a professional picture as an eye-catcher?
- Prepare logical arguments as to why exactly you are the ideal tenant for the property and make sure you talk to the landlord.
- Offer to pay the rent for a few months in advance if you win the bid for the apartment. This signals solvency to the landlord.
- Do not try to negotiate the rent with the landlord. Demand determines the price and this is unbroken. There are enough prospective tenants who will pay the advertised price without batting an eyelid, plus the estate agent's commission and the purchase of permanently installed interior fittings.
- Enlarge the catchment area where you are looking. Maybe it doesn't necessarily have to be the Glockenbachviertel, perhaps Ismaning can also meet your requirements!
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How difficult is it to find an apartment in Munich?
Finding an apartment in Munich that you like and seems affordable is challenging, but findable. In fact, the rental market in the state capital is one of the toughest in Germany. Only major cities such as Berlin, Hamburg and Frankfurt are in the same league when it comes to finding an apartment. The market is empty. New buildings have their price. Even with all the necessary documents, it is often impossible to find an apartment in a timely manner.
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How can you find an apartment in Munich?
Like everywhere else in the world, contacts are invaluable when looking for accommodation. Switching to less popular districts can also help you find a suitable place to live. It is certainly more difficult to find an apartment in Maxvorstadt than in Obermenzing. It goes without saying that documents proving the solvency of the person looking for an apartment are helpful when searching for an apartment. Status symbols used in moderation when viewing the desired property are also suitable for getting your dream apartment more quickly. In general, especially if you have little time to look for an apartment or want to find one quickly, it is a good idea to use a real estate agent. The better his or her network, the quicker you will be successful in finding an apartment. Alternatively, you can look for furnished accommodation. Here you can easily move into an apartment in the area of your choice, which is already equipped with everything you could wish for. This temporary accommodation is ideal for you to then take your time looking for the right apartment in the desired residential area.
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How expensive are apartments in Munich?
The average price per square meter varies enormously within the city. Prospective tenants in Munich pay different amounts per square meter depending on location, furnishings and condition. If you want an average value, the city's rent index from 2023 is helpful. Based on a representative survey and officially approved, the average local comparative rent is currently 14.58 euros per square meter.
Temporary living
Welcome to your
new home.
Felix Zenko
Director Real Estate Rentals
Authorized Signatory
Real estate sales
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