What is happening in the Munich property market now?

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Has the Munich property market finally stopped falling?

Yes. Munich property prices have broadly stopped falling, and the freshest transaction data now look much more like stabilization than another leg of the correction.

Munich's Gutachterausschuss, which records actual completed sales rather than advertised prices, found resale apartment prices ranging from about -1% to +5% year over year depending on the building's age. Averaged across those groups, prices were up roughly 1%.

New apartments tell a similar story, although location is starting to matter much more. Prices were about 2% lower in average residential locations but 4% higher in good locations.

That is a clear change from the heavy repricing that followed the interest-rate shock. Immowelt's longer asking-price series shows Munich apartments falling from about €9,220 per square metre in 2021 to €7,640 in 2023, a drop of roughly 17%. Its latest estimate has climbed back to around €8,070.

We would therefore call the crash phase over. Munich has recovered only part of its previous decline, and today's price increases are still small, but sellers are no longer being dragged down by the kind of broad market repricing seen in 2022 and 2023.

Are people actually buying Munich property again?

Yes. Buyers have returned to the Munich property market, although activity still sits well below the extraordinary zero-rate years.

The recovery started before this year. Munich recorded 14% more purchase contracts in 2025 than in 2024. The latest Gutachterausschuss figures then show another 3% year-over-year increase in the first half of 2026.

Money changing hands grew faster than the number of deals. Property turnover reached roughly €5.4 billion during the half year, up 7%.

Apartments account for a large part of the activity. Around 4,950 condominium and partial-ownership units were sold, 3% more than a year earlier, and only about 650 were new-build units. Roughly seven out of every eight sales in that category therefore involved existing stock.

That mix tells us quite a lot about the recovery. Munich buyers are coming back mainly through the resale market, where sellers have already absorbed much of the repricing from higher interest rates. Developers asking large premiums for new homes face a tougher audience.

The market feels alive again because buyers and sellers are finding prices at which they can actually transact.

Are Munich apartment prices rising again?

Yes, but Munich apartment prices are rising slowly enough that calling this another boom would be premature.

The Gutachterausschuss currently puts average resale-apartment appreciation at about 1%, while Immowelt's latest citywide asking-price series shows apartments around 1.4% above its 2025 average.

Those are small movements by Munich's historical standards. Immowelt recorded annual increases of roughly 9% in 2019 and 12.5% in 2021. Today's market is nowhere near that pace.

What has changed more noticeably is the spread between properties. The official transaction data show different resale vintages moving anywhere between -1% and +5%, while new apartments gained in good locations and slipped in average ones.

Buyers these days are much less willing to pay the same premium simply because an address says Munich. A well-located apartment with a sensible layout, good energy performance and no obvious building problems can sell into a firmer market. An overpriced apartment with renovation risk can still sit.

So the Munich average is becoming less useful. The city is recovering, but individual properties are moving at very different speeds.

Why aren't Munich property prices rising faster?

High mortgage rates are still holding Munich property prices back, even though housing is scarce and buyers have started returning.

A ten-year German mortgage currently costs around 4% for many borrowers. During the cheap-money period, rates around 1% were possible.

The difference is brutal on Munich-sized loans.

Take a €560,000 mortgage and assume 2% initial principal repayment. At 1% interest, the starting payment is about €1,400 a month. At 4%, it reaches approximately €2,800.

Nothing about the apartment has changed in that calculation. The buyer simply needs another €1,400 every month.

That helps explain one of the strangest features of Munich today. Population pressure, rising rents and limited construction would normally push sale prices hard. Expensive debt keeps enough buyers on the sidelines to stop that pressure from turning into another bidding frenzy.

Is Munich a buyer's market now?

Partly. Munich buyers currently have much more negotiating power, but the property itself remains extremely expensive.

The clearest evidence is visible outside the strongest apartment segment. Munich's Gutachterausschuss found price declines in almost every category of semi-detached and terraced houses. Its early analysis of individual residential land also placed transaction prices about 8% below the latest official land reference values, although the committee warns that the number of transactions is still small.

Buyers can therefore challenge unrealistic asking prices in a way that was much harder during the boom.

That does not make Munich cheap. Immowelt still puts apartment asking prices around €8,070 per square metre. The Gutachterausschuss finds newly built apartments averaging about €9,800 per square metre in ordinary residential locations and €10,550 in good ones.

A buyer may negotiate tens of thousands of euros from an ambitious seller and still end up purchasing one of Germany's most expensive homes.

Today the market is negotiable: Munich sellers have lost some power, while affordability remains awful.

Why are Munich houses still weaker than apartments?

Munich houses are struggling more than apartments because seven-figure purchases become particularly painful once mortgages are expensive.

The latest official transactions show prices falling in almost every semi-detached and terraced-house category. New semi-detached houses were the main exception.

Look at the amounts buyers face. A new semi-detached house in an average or good Munich location sold for about €1.46 million on average. A resale equivalent was around €1.13 million.

New corner terraced houses averaged roughly €1.18 million, compared with €955,000 for resale properties. Existing mid-terrace houses averaged about €895,000.

Even affluent families can hit a financing wall at those levels. A €1 million mortgage with 4% interest and 2% initial repayment starts around €5,000 per month before maintenance, insurance and other ownership costs.

Smaller apartments have a much wider buyer pool, especially among couples and households bringing substantial equity.

The weakness in houses therefore says more about financing capacity than about people suddenly losing interest in having a garden in Munich.

Are Munich rents still rising?

Yes. Munich rents are still rising today, and the rental market remains considerably tighter than the sales market.

Immowelt's freshest asking-rent estimate for apartments is about €21.56 per square metre. That is 3.1% higher than a year ago, 1.6% higher over six months and roughly 15% higher over four years.

The city's official Mietspiegel tells a different but equally useful story. Munich's average net cold rent in the current Mietspiegel is €15.38 per square metre, up 5.5% from €14.58 in the previous edition.

Those numbers measure different parts of the rental market. The Mietspiegel includes qualifying existing rents, whereas the Immowelt figure reflects homes being advertised today. That is why somebody already sitting on an older lease can pay far less than a newcomer searching online.

For a 70-square-metre apartment, €15.38 per square metre works out at about €1,077 a month before utilities. At €21.56, the same floor area costs roughly €1,509.

That €430 monthly gap helps explain why people often stay in Munich apartments that no longer perfectly suit them. Giving up an older lease can mean paying much more for the next home.

Is Munich building far too few homes?

Yes. Munich is currently building barely half the number of homes the city says it needs each year.

Only 4,348 homes were completed in 2025, according to Munich's Statistical Office. The city's long-term planning says around 8,500 homes need to be completed annually to keep up with expected growth.

The shortfall is therefore about 4,150 homes in a single year.

More worrying is how quickly construction has fallen. Munich completed 9,837 homes in 2023 and 6,501 in 2024 before dropping to 4,348. In two years, annual completions fell by roughly 56%.

Permits offer a little more hope: 6,146 homes were approved in 2025. Even that number remains well below the city's 8,500-home requirement, and a permit obviously does not put an apartment on the market immediately.

Construction moves slowly enough that today's weak pipeline can affect Munich for years. Projects have to be financed, approved, built and eventually completed. A sudden improvement in mortgage conditions would bring buyers back much faster than developers could bring thousands of new homes online.

Does Munich still have enough population and jobs to keep housing demand strong?

Yes. Munich still has a very strong base of people and jobs underneath its property market, although the latest population figures show that growth is not perfectly smooth month to month.

The city ended 2025 with 1,612,429 residents registered at their main address, 8,653 more than a year earlier. During 2025, nearly 100,000 people moved into Munich and around 95,000 left.

The newest monthly count has since eased to about 1.605 million residents. We would not read too much into that short move by itself. Munich has been in a population growth phase for more than two decades, and the city's latest demographic model expects roughly 1.83 million residents by 2045, around 226,000 more than its 2024 starting point.

Employment is holding up remarkably well too. Munich's latest economic report recorded about 976,000 employees subject to social-security contributions in 2025, up 0.6%, while Bavaria and Germany each managed only about 0.1% growth.

There is some deterioration underneath that headline. The city's unemployment rate reached 5.4% in June 2026, so Munich is clearly feeling the weaker German economy.

We still do not see the kind of shrinking population or collapsing employment base that would normally undermine a housing market over several years. Munich's bigger headache remains fitting demand into enough homes.

Is renting still cheaper than buying an apartment in Munich?

Yes. For many households today, renting a similar Munich apartment still requires much less monthly cash than buying it with a large mortgage.

Take a 70-square-metre apartment at roughly €8,070 per square metre. The purchase price comes to about €565,000 before taxes and transaction costs.

With 20% equity, the buyer would borrow roughly €452,000. At a mortgage rate around 4% and 2% initial repayment, the starting loan payment is about €2,260 per month.

The same 70 square metres at the current citywide asking rent of €21.56 per square metre costs about €1,509 per month before utilities.

Buying does have one obvious advantage: part of that €2,260 mortgage payment repays principal and builds equity. Rent does not. But ownership also means finding more than €110,000 for a 20% deposit, paying transaction costs and covering maintenance and building reserves.

The monthly gap is large enough that Munich's rising rents have still not made buying an easy financial choice.

Are Munich rental yields attractive now?

Not really. Munich rental yields remain too low for investors looking for strong immediate cash flow.

Using today's broad asking figures gives us a quick sense of the economics. As seen above, apartment asking rents are around €21.56 per square metre. That equals about €259 a year.

Against an apartment price around €8,070 per square metre, the gross yield comes to roughly 3.2%.

A landlord never keeps the full 3.2%. Non-recoverable building charges, maintenance, management, vacancy and occasional large repair bills all sit underneath it. An occupied apartment with an old below-market lease can produce an even lower gross return.

Munich's own transaction data for entire rental buildings point in the same direction. The Gutachterausschuss currently finds an average property yield of roughly 2.8% and an average purchase factor around 30 times annual gross rent across the 35 qualifying rental buildings it analyzed.

Investors buying Munich these days are therefore making a long-term scarcity and capital-value bet. Anyone expecting easy rental cash flow at normal market prices is likely to be disappointed.

Are older Munich apartments becoming harder to finance?

Yes. Older, inefficient Munich apartments face a growing financing disadvantage, and banks are explicitly becoming more selective about them.

The Bundesbank's latest survey of German lenders found that banks tightened mortgage standards again in the second quarter. The net share reporting tighter standards rose to 7%, compared with 4% in the previous survey.

Energy performance is becoming part of that divide. Banks told the Bundesbank that lending standards had become more restrictive for homes with low energy efficiency where little or no improvement was planned. Buildings with good current or expected energy performance were treated more favorably.

For Munich buyers, that changes how we should look at an apparently cheap older apartment.

A low asking price can be wiped out by poor reserves, an ageing heating system, old windows, roof work, façade renovation or an owners' association preparing a large special assessment. Financing can also be less attractive if the bank views the property itself as weaker collateral.

Two apartments with the same floor area and postcode can therefore deserve very different prices.

Building condition is becoming part of the investment decision in a much more serious way than it was when cheap money lifted almost everything.

Could Munich property prices start falling again?

Yes. Munich property prices could fall again if financing gets materially worse or the local economy weakens much more, although another broad crash currently looks less likely than a patchy correction.

Credit demand has already softened lately. The Bundesbank's newest lending survey found a significant quarterly drop in German household loan demand, with banks pointing to higher interest rates, weaker consumer confidence and a worse housing-market outlook.

As we saw earlier, mortgage rates around 4% already stretch Munich buyers. Moving materially above that level would quickly reduce what households can borrow.

There is also more economic risk than the headline employment record suggests. Munich unemployment has risen, German manufacturing remains weak, and the city has substantial exposure to sectors such as automotive, technology and professional services. A serious local employment downturn would eventually reach housing demand.

The weak spots would probably show first in expensive houses, poor-energy buildings, properties needing major renovation and homes listed far above comparable sales. We are already seeing some of those segments lag.

A citywide supply glut looks much harder to build a bearish case around. Munich simply is not producing enough housing for that.

What could make Munich property prices jump again?

Cheaper mortgages arriving before housing construction recovers would give Munich property prices the clearest route to another strong upswing.

Consider what happens to a €600,000 mortgage. With 2% initial repayment, a 4% interest rate means a starting payment around €3,000 a month. At 3%, that falls to roughly €2,500.

A €500 monthly improvement suddenly makes the same apartment possible for households that could not comfortably finance it before.

Housing supply would struggle to respond anywhere near as quickly. As pointed out above, Munich completed only 4,348 homes in 2025 against a stated annual requirement of 8,500. Even the 6,146 homes permitted that year fall short of what the city says it needs.

That creates an awkward scenario for people waiting for cheaper mortgages. Lower rates could improve affordability briefly, but if thousands of buyers return while new construction remains depressed, part of that saving may quickly reappear in higher sale prices.

The next Munich boom therefore does not require another huge population shock. A meaningful decline in financing costs could be enough if the supply pipeline stays this thin.

So what is happening in the Munich property market now?

The Munich property market is recovering today, but this recovery is still slow, uneven and heavily constrained by expensive financing.

Three parts of the market are moving at different speeds.

Sales have normalized first. As seen above, transaction numbers are rising again and resale apartment prices are averaging roughly 1% growth rather than continuing their previous decline.

Renters are feeling the shortage much more directly. Asking rents continue to rise, while someone entering the market today can face rents far above the average captured in existing leases.

Construction is the part we would worry about most over the next few years. Munich's pipeline has weakened while the city still expects long-term population growth and continues to support almost one million jobs.

That combination leaves us with a fairly strong conclusion. Munich has moved beyond its post-rate-shock property slump. Buyers can negotiate much harder than during the boom, yet genuinely attractive apartments are becoming firmer again. Houses and compromised properties remain easier to bargain over. Investors still face poor cash yields. Tenants face the toughest market of all.

The balance could stay like this for a while if financing remains expensive. If mortgage rates fall meaningfully before developers manage to rebuild supply, Munich would be unusually well set up for faster price growth.

Fact-checked and reviewed by our local expert

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Nicholas Runtic

CEO and cofounder of LDP Group

Based in Munich, Nicholas Runtic is CEO and co-founder of LDP Group, a real estate investment firm serving international professionals in Germany. His background in finance, private banking, and property investing gives him a strong understanding of Munich’s competitive market and the importance of selecting high-quality assets for long-term wealth creation.

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