Price corrections in all Bavarian cities examined; in Munich the price reductions compared to autumn 2022 are between -5% and -10% The market research institute of IVD Süd e.V. presented the traditional market report “Residential properties for sale in Bavaria and the state capital of Munich in spring 2023” at a video press conference on March 10, 2023. The report provides information on current prices and market trends on the Bavarian real estate market and can be purchased at

“Due to the changed framework conditions, the residential real estate market has changed significantly in recent months. After many years of sharp price increases on the purchase market, the first price corrections came in Munich in autumn 2022,” says Prof. Stephan Kippes, head of the IVD market research institute. “The current survey in spring 2023 now makes it clear that the turnaround has arrived in all large and medium-sized Bavarian cities, albeit to different degrees. Demand has dropped significantly; the supply and the scope for price negotiations, on the other hand, have increased.”

The good economic development, low interest rates and high demand have caused purchase prices on the Bavarian residential real estate market to rise continuously in recent years. “In view of the turnaround in interest rates, high inflation and an impending recession, the situation on the residential real estate market has deteriorated significantly,” says Prof. Stephan Kippes. “Current market activity is dominated by a certain inertia: the price expectations of buyers and sellers often do not yet match. The market is currently in a pricing phase.”

Over the past year, the market has changed from a seller’s to a buyer’s market. As a result, there are currently more opportunities for buyers to get properties that they could not get a year ago or to buy properties at a slightly cheaper price. In addition, there are significantly more offers on the market than in previous years. Especially for those buyers who have a lot of equity, now is the opportunity to find a good property.

For the majority of prospective buyers, however, buying a home is likely to be much more difficult. After interest rates have quadrupled within a year and the cost of living has risen significantly, but purchase prices remain at a very high level despite the current declines, demand from owner-occupiers, who traditionally finance property purchases with a high proportion of debt, is increasing return. Many prospective buyers are refraining from their purchase intentions for the time being and are switching to the already tense rental market. In housing construction, the strong braking effects of the enormously increased construction prices, high interest rates and the continuously growing demands on new buildings are becoming increasingly visible. The restrictive behavior of the banks in lending and the currently difficult to calculate project costs due to exploding material prices mean that many projects are stopped or postponed. The property developers are currently acting very cautiously both when purchasing land and when planning new construction projects. The economic viability of projects is viewed very critically, since price increases can only be passed on to the market to a limited extent. Private house builders are also increasingly postponing their new construction plans in view of the rising costs and the lack of sensible state subsidies for new construction.

While housing production is declining, the need for housing in the prosperous regions of Bavaria continues to increase. The proportion of inexpensive living space is already too scarce in many places. Increasing population figures – not least due to the numerous refugees from Ukraine – and a growing number of single-person households continue to drive the demand for apartments in the Free State. Comprehensive measures must be taken to prevent the housing shortage from worsening. This includes the right balance between social and ecological goals such as affordable energy requirements, reliable subsidy programs, tax incentives and simplification and acceleration of the approval process.

Source: IVD