Real estate price analysis Hamburg

Daniel Ritter, Managing Partner at VON POLL IMMOBILIEN:

"Rental prices are currently rising in many places, while purchase prices for real estate are falling - the markets are drifting apart, so to speak. So the question is obvious: will buying become attractive again? There are many reasons for this. Firstly, the interest rate level for financing with a strong equity base has stabilized at around 3.7 percent, which is below the highest level to date from October 2022. In addition, prospective buyers have a wider range of properties to choose from. Prospective buyers should take advantage of this opportunity. Ultimately, it is uncertain how long this will remain the case. Further interest rate hikes by the European Central Bank are likely. In the Hanseatic City of Hamburg, purchase prices for condominiums fell in all seven districts in the first half of 2023 compared to the same period last year. In five out of seven districts, this was even in the double-digit percentage range. Rents, on the other hand, stagnated or rose slightly across the districts, although in some cases they also rose very sharply at district level."

The gap between purchase and rental prices is widest in the districts of Wandsbek, Hamburg-Mitte and Altona. In Wandsbek, prices per square meter fell by an average of -11.4 percent (purchase: €4,819/m²), in Hamburg-Mitte by -11.3 percent (purchase: €5,729/m²) and in Altona by -11.8 percent (purchase: €6,528/m²). By contrast, rental prices in the first half of 2023 increased the most among the Hamburg districts in Wandsbek at 3.6 percent (rent: €12.46/m²) compared to the first half of 2022. This was closely followed by Hamburg-Mitte and Altona, where rents rose by 2.8 percent (rent: €13.73/m² and €15.01/m² respectively).

Marcel Karstens, branch manager at VON POLL IMMOBILIEN Hamburg - Wandsbek:

"Due to the rise in mortgage interest rates since summer 2022, many prospective buyers are hesitating with their decision to purchase a property and are switching to the rental market. In the long term, however, real estate is an attractive investment. This is mainly because falling demand and longer marketing times are having a significant impact on the price trend for properties for sale, leading to falling purchase prices. Properties in A-locations and properties with very low prices and good energy standards are currently in high demand."

Abb. 1: Purchase and rental price development in the Hamburg districts, HY1/22 vs. HY1/23 (Graphic: von Poll Immobilien GmbH) - interactive graphic incl. figures by mouseover: https://www.datawrapper.de/_/uX1uQ/

A look at the district level also shows that highly sought-after residential areas in particular are drifting even further apart in terms of purchase and rental price trends, such as the popular districts of Sternschanze or Altona-Nord in Altona. While property prices for condominiums in the first half of 2023 fell by -15.3 percent in Sternschanze (purchase: €8,889/m²) and by -12.9 percent in Altona-Nord (purchase: €6.973 €/m²), rents there also saw double-digit growth of 12.1 percent (rent: €18.66/m²) and 10.7 percent (rent: €17.69/m²) respectively. In the upmarket district of Blankenese in Altona, prices per square meter for condominiums also fell by as much as -11 percent (purchase: €7,389/m²). Rents here rose by 6 percent (rent: €15.95/m²).

Sandra Lundt, branch manager at VON POLL IMMOBILIEN Hamburg - Elbvororte:

"The supply of real estate in Hamburg is currently very high, as some owners are still holding on to the old prices from the beginning of 2022. However, rising interest rates and the discussion about the energy efficiency of residential properties are visibly dampening purchase prices. Since early summer 2023, we have noticed that demand is picking up again. The entire west of Hamburg remains very popular. The area's proximity to the Elbe, various parks and many excellent schools make it particularly attractive. The rental market has also strengthened. Many prospective buyers will probably continue to rent because financing has become significantly more expensive and the amount of liquid equity required is much higher. However, families and couples who have their permanent home in Hamburg and want to live there in the long term will continue to buy - also for security reasons. Real estate is still a safe investment. Of course, the location counts here too."

Fig. 2: Purchase and rental price trends in selected Hamburg districts, HY1/22 vs HY1/23 (Graphic: von Poll Immobilien GmbH) - interactive graphic incl. figures by mouseover: https://www.datawrapper.de/_/zeQGy/

A similar trend can be observed in the Hamburg-Mitte district. In the trendy district of St. Georg, for example, purchase prices for properties fell by -12.2 percent (purchase: €8,408/m²), while rents rose by 7.4 percent (rent: €17.85/m²). In HafenCity in Hamburg-Mitte, prospective buyers also paid -11.6 percent less for a square meter of a condominium in the first half of 2023 (purchase: €12,780/m²) than in the first half of 2022, while those looking for a rental apartment had to expect an average price increase of around 4.6 percent (rent: €22.94/m²).

Matthias Preuß, branch manager at VON POLL IMMOBILIEN Hamburg - Alster-Ost:

"The marketing times for residential properties have become much longer. Some owners who did not want to move away from old price expectations have decided to rent out their property first instead of selling it. They are still struggling with the new situation. However, interest among potential buyers has increased slightly again since the beginning of 2023. We assume that the market will level out again by 2024 at the latest. This is because prospective buyers are clearly benefiting from the large supply of properties on the market. They also currently have a very good basis for negotiating price reductions. Buying real estate is always attractive. However, investors are still cautious at the moment and are only buying at very low prices. However, this is also due to the fact that rents in Hamburg are capped by the rent freeze and they have to calculate their returns carefully."

Back to the comparison of the Hamburg districts: average purchase and rental prices are also diverging in Harburg and Bergedorf, south of the Elbe. While purchase prices fell the most of all the districts analyzed in Hamburg here at -12.1 percent (purchase: €4,018/m²) and -13.5 percent (purchase: €4,407/m²), rents fell or stagnated the least here at 1.1 percent (rent: €10.48/m²) and 0.6 percent (rent: €11.81/m²) respectively.

In Hamburg-Nord with -6 percent (purchase: €7,437/m²) and Eimsbüttel with -9.1 percent (purchase: €6,519/m²), the average purchase prices for condominiums fell the least among the Hamburg districts. Rents here rose by 2.5 percent (rent: €15.41/m²) and 2.4 percent (rent: €15.51/m²) respectively, meaning that the gap between purchase and rental prices is narrowest here. However, there are also outliers at district level compared to the district, such as Barmbeck-Süd, the attractive residential district in Hamburg-Nord, with purchase prices falling by -12.2 percent in the first half of 2023 (purchase: €6,212/m²) and rents rising by 6.9 percent (rent: €15.93/m²). The opposite is the case in the premium location of Rotherbaum in Eimsbüttel with its villas and mansions. Here, prices per square meter for condominiums fell again by only -2.1 percent (purchase: €10,537/m²) and rents rose by 4 percent (rent: €20.18/m²).

Purchase and rental price trends in the Hamburg districts