15.10.2024 • 3 min. reading time
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Purchase-rent price gap opens in some districts
Frankfurt am Main, 23 AUGUST 2023 - The real estate prices for residential property knew only one direction in the past and that pointed upwards. This development has changed at the latest since the end of summer 2022. Because the rising inflation, reinforced by the war in Ukraine, led to a change in the interest rate policy of the central banks, which inevitably increased the mortgage rates. Prospective buyers now had to recalculate. Demand for real estate declined as a result of the higher interest rates, while at the same time the rental market picked up and rents rose - especially in major German cities. VON POLL IMMOBILIEN experts analyzed how much the average purchase and rental prices1 in Frankfurt am Main diverged for apartments in the 45 districts of Hesse's most populous city for the first half of 2023 compared with the first half of 2022.
Daniel Ritter, managing partner at VON POLL IMMOBILIEN:
"Currently, rents are rising in almost all metropolitan areas, while purchase prices for real estate are falling - the markets are diverging, so to speak. Will buying therefore become more attractive again? There are many arguments in favor of this. Prospective buyers have slowly become accustomed to the new interest rate level. In addition, they have a wider range of properties to choose from, marketing times have lengthened and their negotiating leeway has increased. Prospective buyers should take advantage of this opportunity. Ultimately, it is uncertain how long the situation will remain this way - and it won't be for long. Further interest rate hikes by the European Central Bank are possible. While in 39 of the 45 analyzed Frankfurt districts, the purchase prices for condominiums fell in the first half of 2023 compared to the first half of 2022 - in 25 districts even in the double-digit percentage range - the rental prices rose in 39 districts, with a double-digit increase in five districts."
The purchase-rent price trend diverges most strongly in the city center, Praunheim and the station district. In the city center, the purchase prices for condominiums fell by an average of -16 percent (purchase: 8,205 €/m2), in Praunheim by -13.8 percent (purchase: 4,611 €/m2) and in the station district by -16 percent (purchase: 7,169 €/m2). In contrast, rents increased in the first half of 2023 compared with the first half of 2022 by 10.4 percent in the city center (rent: €22.06/m2), by 12.4 percent in Praunheim (rent: €13.71/m2) - and thus the strongest rent increase among the analyzed districts in Frankfurt am Main - and by 9.8 percent in the Bahnhofsviertel (rent: €24.57/m2).
By more than 20 percent, the purchase-rent price trend in the first half of 2023 compared with the same period last year also drifted apart in Griesheim, Eckenheim, Niederrad, Rödelheim and Schwanheim. Purchase prices fell by -16.6 percent in Griesheim (purchase: €4,459/m2), by -13.7 percent in Eckenheim (purchase: €4,817/m2), by -10.4 percent in Niederrad (purchase: €4.917 €/m2), in Rödelheim by -17.4 percent (purchase: 4,943 €/m2) and in Schwanheim by -12.8 percent (purchase: 4,509 €/m2). Rents, on the other hand, rose by 6.7 percent in Griesheim (rent: 13.05 €/m2), by 8.3 percent in Eckenheim (rent: 13.95 €/m2), by 10.3 percent in Niederrad (rent: 15.82 €/m2), in Rödelheim by 3.3 percent (rent: 14.31 €/m2) and in Schwanheim by 7.7 percent (rent: 13.50 €/m2).
Fig. 1: Part 1/2 of the purchase and rental price development in the districts of Frankfurt am Main, HY1/22 vs. HY1/23 (Graphic: von Poll Immobilien GmbH) - interactive graphic incl. Numbers by mouseover: https://www.datawrapper.de/_/jMugr/
Griesheim and Rödelheim are thus among the first three districts with the strongest falling purchase prices in Frankfurt am Main in the first half of 2023. The purchase prices for condominiums have fallen even more strongly only in Eschersheim with -17.6 percent (purchase: 5,601 €/m2). The rental prices have increased there only slightly with 1.2 percent (rent: 14.23 €/m2).
Daniel Ritter, managing partner at VON POLL IMMOBILIEN:
Also interesting: Contrary to the majority falling purchase prices, the square meter prices for condominiums in the old town with its medieval flair developed with 7.3 percent (purchase: 9.608 €/m2), in Nieder-Erlenbach with 6.5 percent (purchase: 4,790 €/m2) and in Harheim with 6.3 percent (purchase: 5,245 €/m2) further upward. This was closely followed by the upscale Westend-Nord district with 5 percent (purchase: 8,900 €/m2) and Gutleutviertel with 4.2 percent (purchase: 8,905 €/m2) price increases. At the same time, however, rents also rose in the Altstadt by 4 percent (rent: 20.66 €/m2), in Nieder-Erlenbach by 2.6 percent (rent: 13.24 €/m2) and in Westend-Nord by 5.3 percent (rent: 18.07 €/m2).
Fig. 3:Part1/2 of purchase and rental price trends in the districts of Frankfurt am Main, HY1/22 vs. HY1/23 (Table: von Poll Immobilien GmbH)
In Harheim - the district with its half-timbered houses and lots of nature - the rental prices, however, are double-digit by 11.9 percent (rent: 12.13 €/m2) increased - the second strongest rent increase among the Frankfurt districts in the first half of 2023, while in the former working-class Gutleutviertel the square meter prices for rental apartments have even fallen by -2.2 percent (rent: 16.97 €/m2) - and thus represent the strongest falling rents among the Frankfurt districts.
About equally falling prices per square meter in the first half of 2023 could renters in Dornbusch with -2 percent (rent: 14.01 €/m2), in Bornheim with -1.5 percent (rent: 16.17 €/m2), in Hausen with -1.4 percent (rent: 15.08 €/m2) and in Heddernheim with -1.3 percent (rent: 13.60 €/m2) are pleased. Between -1 percent and 1 percent, rents stagnated in as many as six districts, including Sindlingen (rent: 11.08 €/m2), Kalbach-Riedberg (rent: 15.52 €/m2), Niederursel (rent: 12.40 €/m2), Nordend-West (rent: 18.04 €/m2) and Fechenheim (rent: 13.24 €/m2).
Between -10 percent and -16 percent, on the other hand, the purchase prices for condominiums fell in 15 Frankfurt districts, including, among others, Heddernheim with -15.9 percent (purchase: 4,736 €/m2), Frankfurter Berg with -15.8 percent (purchase: 4.104 €/m2), Gallus with the newly developed Europaviertel with -13.5 percent (purchase: 7,111 €/m2), Oberrad with -12.2 percent (purchase: 4,748 €/m2) and in Sachsenhausen-North with -11.1 percent (purchase: 7,252 €/m2). In Sachsenhausen-South, however, prices per square meter for residential property fell by only -6.1 percent (purchase: 6,114 €/m2).
In Sossenheim and Nieder-Eschbach, purchase prices were virtually stagnant at 0.3 percent (purchase: 3,753 €/m2) and -0.2 percent (purchase: 4,360 €/m2), respectively. However, rents in Sossenheim increased somewhat by 5.1 percent (rent: 11.49 €/m2), while in Nieder-Eschbach they tended to stagnate at 0.9 percent (rent: 11.81 €/m2).
Fig. 4: Part 2/2 of the purchase and rental price trends in the districts of Frankfurt am Main, HY1/22 vs. HY1/23 (Table: von Poll Immobilien GmbH)
1 The data basis of the purchase price analysis for condominiums and rental prices for apartments in the portfolio (up to and including 2019) is based on the average asking prices in the first half of 2023 compared to the first half of 2022 from GeoMap and VON POLL IMMOBILIEN Research (2023).
