Coastal Report 2023: Development of real estate prices on the North Sea and Baltic Sea

Daniel Ritter, Managing Partner at VON POLL IMMOBILIEN:

"Despite the already very high price level in some regions on the North Sea coast, real estate prices have continued to rise in recent years. That seems to be over for now. In all regions analyzed on the North Sea coast, prices for residential property in the first quarter of 2023 are falling or stagnating compared to the same quarter of the previous year," says Daniel Ritter, Managing Partner at VON POLL IMMOBILIEN. He continues: "This clearly shows that prospective buyers are no longer willing to pay any price due to the current interest rate situation and have to calculate more precisely what they can afford given the current situation. Nevertheless, we have noticed that the demand for residential property on the coast is still there. We assume that the market will level out again in the preferred waterfront locations in the course of 2023."

As expected, the North Sea islands are still the frontrunners in the price table. Accordingly, houses are most expensive on the North Frisian Islands - here, prospective buyers will have to calculate with an average of 12,866 euros for one square meter of living space in the first quarter of 2023. The main reason for the high price level is the island of Sylt, which is part of the North Frisian Islands. A separate analysis shows that Sylt already commands an average price per square meter of €15,348/m², making it a strong price driver in the archipelago. While property prices on the North Frisian Islands as a whole fell by -7.5 percent compared to the same period last year, the figure for Sylt was as much as -14 percent.

Martin Weiß, branch manager at VON POLL IMMOBILIEN Sylt:

"It is well known that most of the properties on Sylt are vacation homes or second homes. Prospective buyers often purchase these properties as an investment, financed with borrowed capital. Since summer 2022, the real estate market has changed across Germany. Demand for properties on Sylt has also fallen significantly. However, when it came to a sale, the properties were usually paid for 100 percent with equity," says Martin Weiß, branch manager at VON POLL IMMOBILIEN Sylt. He continues: "However, property prices have mostly remained stable, even though there has been less demand. It remains to be seen how the market will develop in the coming months. In principle, real estate on Sylt is still considered a crisis-proof investment."

The second most expensive are the average square meter prices of 8,626 euros on the East Frisian Islands, which include Juist, Langeoog and Norderney, for example. This means that houses here are almost 33 percent cheaper than on the North Frisian Islands. In contrast, the price level on the East Frisian Islands has barely fallen - at -0.5 percent, property prices stagnated in the first quarter of 2023 compared to the first quarter of 2022.

Home prices on the mainland, on the other hand, are significantly cheaper: in the district of Friesland (mainland only), house prices fell by -4.4 percent to €2.227/m², in the district of Aurich (mainland only) by -8.6 percent to €2,212/m², in the district of North Friesland (mainland only) by -14 percent to €2.148 €/m², in the district of Cuxhaven by -1.7 percent to € 2,145/m² and in the district of Dithmarschen by -9.1 percent to € 2,119/m². This means that the district of Nordfriesland (mainland only) recorded the second sharpest fall in prices in the ranking.

Square meter prices still below the €2,000 mark can be found in the two district towns of Emden and Bremerhaven, which are also the cheapest regions in the price ranking. Here, a house costs €1,974/m² and €1,946/m² respectively, prices have fallen by -9.4 percent and -6.9 percent.

Nils Onken, branch manager of the VON POLL IMMOBILIEN stores in East Frisia (Norden, Aurich, Emden and Esens):

"While supply has increased significantly, demand has decreased. This has also resulted in a longer marketing period from four to six weeks to currently five to eight months. We have reacted accordingly and reduced prices by 10 percent to 30 percent - depending on the location - and restructured our marketing measures. The market has developed from a seller's to a buyer's market," explains Nils Onken, branch manager of the VON POLL IMMOBILIEN stores in East Frisia (Norden, Aurich, Emden and Esens). He continues: "However, larger towns and cities with a good infrastructure have continued to prove particularly stable in value. We are observing the greatest fall in prices in rural regions. However, with increased interest rates and energy costs, it is usually not the purchase price that is decisive in the end, but rather the ongoing monthly costs."

Up and down of property prices on the Baltic Sea coast

The German Baltic Sea coast has experienced a real boom in recent years. More and more people are being drawn to the picturesque coastal towns and villages to escape the hustle and bustle of the big cities and enjoy life by the sea with more privacy. However, as interest in the Baltic Sea has increased, property prices have only gone in one direction and that is upwards. Since the late summer of 2022, however, the real estate market has turned around due to the sharp rise in interest rates. Property prices are stagnating or falling again for the first time in some regions. The VON POLL IMMOBILIEN experts have analyzed the exact situation and the property price development for single-family homes¹ in the districts, independent cities as well as on the peninsulas and islands^* on the Baltic Sea coast and compared the development of purchase prices² in the first quarter of 2023 with the first quarter of 2022.