REAL ESTATE MARKET REPORT MUNICH 2025/II

The first half of the year was characterized by strong growth in sales and largely stagnating rental income. The 3rd quarter was somewhat more subdued. The supply of properties for sale continued to rise over the course of the year. The supply of furnished apartments and houses was mixed.

The most important points at a glance:

• Buying market: The supply of apartments and houses has increased by 10-20% - owners should take advantage of sales opportunities promptly.
• Rental market: Despite major events such as BAUMA and IAA, demand is subdued; rents remain largely stable.
• Population: Munich's population is stagnating - since the beginning of the year, the increase has been less than 1,000 people.
• Building permits: In the city -45%, in the surrounding areas significant increases in some cases - but not enough is being built.
• Interest rates: Mortgages remain expensive, many experts expect interest rates to rise again by up to 4% in the short term.

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The first half of the year was characterized by strong sales figures. Demand momentum slowed somewhat in the 3rd quarter and at the beginning of the 4th quarter. According to Immoscout24 figures, supply in Munich has risen by around 10-20% compared to the previous year (apartments, houses, land).

Immowelt wrote in a newsletter last week:
"Metropolitan areas with subdued development: In Hamburg (+1.6 % to €5,997/m²), Munich (+0.7 % to €8,186/m²) and Frankfurt (+0.2 % to €5,547/m²), the high price level is slowing momentum. Berlin even recorded a slight drop of -0.3% to €4,857/m²."

Quite a few owners are thinking about selling and, on the other hand, do not want to sell too cheaply. However, the growing supply is not an argument for waiting, but rather for not postponing the sale. We advise property owners who are thinking of selling to start the sales process quickly.

Properties with unique selling points in attractive locations appeal to owner-occupiers. Here, the willingness to finance with higher or full equity is greater.
If a property is to be profitable as an investment, the scope for the buyer is significantly smaller. Excessively high purchase price expectations are then not viable for the buyer.

Buyers must always be aware of the unique nature of each property. The location and the attractiveness of a property are particularly important if it is intended for owner-occupation. Every apartment and every house is unique in its own way. Many locations are irretrievable. Investors need to calculate carefully.

As an excellent sales partner with over 30 years of market experience, Mr. Lodge is at your side for the sales and letting phase.

The supply of real estate on the Immoscout24 portal has continued to rise in recent months. Compared to the previous year, the supply of apartments and houses in the city and district of Munich is 20 to almost 30% higher. The front-runner is the district of Ebersberg, where the supply of houses has risen by 85%.

Building permits for apartments developed very differently up to the end of September 2025. In the city of Munich, there was a record drop (-39% with only 3,194 permits), whereas 51% more permits were issued in the district of Munich. Other districts also issued significantly more building permits in some cases, but the following still applies: approved is not built. (Source: Bavarian State Office for Statistics)

According to the City of Munich's statistics office, the population stagnated in the first half of 2025, but by September it had risen again moderately with an increase of 3,428 people. (1,607,285 main residents compared to 1,603,857). The number of households has increased by 4,819 since January (868,153 compared to 863,334).

Source: Munich Statistical Office, as of August 2025

Slight autumn upturn on the Munich labor market: Unemployment falls in October

Compared to the previous month, unemployment in the city of Munich fell by 3.4% to 50,073 people in October. The rate is 5.1% (previous year 4.7%). 2,243 new jobs were registered in October - 12% compared to the same month last year. The job portal Stepstone reports approx. 2% more jobs for the Munich area compared to the previous year. The number of employees subject to social security contributions remained unchanged compared to the previous month at 1,239,989 (source: Federal Employment Agency, as at October 2025)

The inflation rate in Germany - measured as the change in the consumer price index (CPI) compared to the same month of the previous year - was +2.4% in September 2025. In August 2025, it was +2.2%, after +2.0% in both July and June 2025. "After falling inflation since the beginning of the year, the inflation rate has now risen for the second month in a row," says Ruth Brand, President of the Federal Statistical Office (Destatis). "Prices for services continued to rise at an above-average rate. In addition, the decline in energy prices continued to slow down significantly and had less of a dampening effect on inflation than in the recent past." Compared to the previous month of August 2025, consumer prices rose by 0.2% in September 2025.

Contrary to some expectations, mortgage costs have not improved.
Interhyp, the largest mortgage broker in Germany, regularly surveys a panel of experts on the development of mortgage rates. According to the survey, two thirds of experts currently expect interest rates to rise to up to 4% in the next six months. "One reason for this forecast is the rising national debt in Germany and the eurozone as a whole," according to mortgage lender Interhyp. (Source: Interhyp, 2% repayment, 50% equity)

Interest rate development