We are thinking of buying an apartment. However, I wonder if now is a good time to do so:
- Munich is by far the most expensive of Germany's big cities as far as real estate prices are concerned. Even in mediocre locations, it's quite impossible to find a good apartment for less than 3,000 €/sq.m., and decent locations can easily cost you more than 4,000 €.
- Contrary to Germany overall, real estate prices have been increasing of late (in Q1 2009, they were more than 10 % higher yoy).
- There's quite a bit of construction activity going on, i.e. a steady flow of new housing will hit the market during the next 1-2 years.
- Meanwhile, the usual strong inflow of people is set to slow down: Who moves to Germany's most expensive city without a job and a reasonably good salary? New hiring has certainly slowed to a trickle, and many high-profile Munich companies are hurt badly by the crisis.
- Finally, at least some potential home buyers are probably worried about their job security and hesitate to take out big bank loans in the current climate.
Sounds to me like real estate prices should start sliding soon. Not expecting them to fall off a cliff, but a gentle downward slope does sound realistic.
So maybe it's better to wait a while. Or maybe we should move to Detroit instead, and get a big house for the price of barely two Munich square metres...
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