How to buy real estate in Germany: a step-by-step guide and current prices

Buying real estate in Germany

Purchasing real estate in Germany is available to all interested parties. However, local citizens can take advantage of certain benefits, such as lower down payment requirements when obtaining mortgage loans. Foreigners often need to contribute significantly more funds. In this article, we will discuss the costs of apartments in various cities in Germany, as well as the conditions for purchasing and possible additional expenses.

The overall state of the housing market in Germany

Since the beginning of 2023, there has been a decline in real estate prices in Germany, especially in major cities where prices have been steadily rising for many years. One of the main factors leading to this situation is the significant increase in interest rates implemented by the European Central Bank, which has raised the key interest rate several times since the summer of 2022. This change has made mortgage lending less accessible. As a result, demand for real estate has started to decrease, leading to falling prices, even though the number of listings on the market continues to grow.

At the beginning of 2024, we can observe a situation where the German real estate market is starting to stabilize, and a price correction is taking place. Many experts unanimously point out that this trend will continue in both 2024 and 2025, comparing it with various economic factors that can influence both price increases and decreases. In the long term, there is a trend towards a slow increase in housing prices.

Despite the current price fluctuations, real estate in Germany is still considered a reliable asset, especially in major cities. Let's take a closer look at apartment prices.

Prices for apartments in the largest cities in Germany

The real estate market in major German cities is represented by the following price categories:

• Berlin: the minimum cost is2,594 eurosper square meter, the average is —4,199 euros, the maximum —7,734 euros.
• Hamburg: here the minimum cost is3,226 euros, average —5,291 euros, the maximum —11,858 euros.
• Munich: in the capital of Bavaria, the minimum prices start from4,901 euros, the average is8,281 eurosmaximum reaches15,094 euros.
• Cologne: the minimum price is2,427 euros, average —4,668 euros, the maximum —9,921 euros.
• Frankfurt am Main: minimum prices start from2,498 eurosThe average price is around2,500 euros, and the maximum is —10,500 euros.
• Düsseldorf: here the minimum cost is2,488 euros, average —4,468 euros, and the maximum reaches almost9,492 euros.
• Stuttgart: the minimum price is3,057 euros, average —4,728 euros, the maximum —8,379 euros.
• Dortmund: minimum prices start from1,461 euros, the average is2,242 euros, the maximum —8,068 euros.
• Essence: the minimum price is equal to1,274 euros, average —4,624 euros, the maximum —9,925 euros.
• Bremen: the minimum price is1,585 euros, average —2,935 euros, the maximum —5,530 euros.

It is important to emphasize that the stated minimum and maximum prices are approximate. The actual cost per square meter of housing largely depends on factors such as location, condition, age, and size of the apartment.

The process of acquiring real estate in Germany

The process of acquiring real estate in Germany is quite complex and requires adherence to a number of rules and procedures. A primary condition for conducting transactions in the real estate market in this country is having a reliable source of financing that will be used for the deal.

If you are planning to buy residential or commercial property in Germany, you will need to prepare certain documents, including:

• A copy of the passport for individuals or an extract from the commercial register in the case of a legal entity.
• A letter from the bank confirming that you have sufficient funds in your account to purchase real estate. This document needs to be provided at the stage of securing the property.

Stages of purchasing real estate

The process of purchasing residential or commercial property in Germany involves several steps:

1. Real estate search

There is high competition in the German market, and there may not be many options, so it is important to spend enough time searching for the right choice. Be prepared to consider many offers before making a decision.

2. Verification and securing of real estate

Before making a final decision on the purchase, it is important to thoroughly examine the land register (Grundbuch). It contains information about previous owners and any encumbrances that may exist on the chosen property. It is also useful to familiarize yourself with the rules for managing tenants, the minutes of owners' meetings, and the financial reports related to property maintenance costs.

Once you are satisfied with everything mentioned above, you can proceed to reserve the property by presenting your terms to the seller.

3. Opening a bank account

To complete the transaction, you can use an account in either a local or a foreign bank.

Chances of opening a bank account for citizens of Russia and Belarus

According to the latest data, having stable and legal sources of income increases the chances of successfully opening a bank account in Germany for citizens of Russia and Belarus to about 50%. However, the situation is more complicated for Ukrainians, who face certain difficulties when trying to transfer funds from their banking institutions.

Procedure for a real estate transaction

When it comes to real estate transactions, it is very important to know that it is necessary to consult a notary to complete all procedures. After the parties sign the contract, the notary submits an application for the preliminary registration of the new owner of the property in the land court, known asland registry office.

Methods of real estate payment

In Germany, there are two main methods of paying for real estate:

• Direct payment to the sellerIn this case, the buyer transfers the money directly to the owner.
• Use of an escrow accountIn this option, the notary opens a special account for the transaction. After receiving the full amount from the buyer, the notary transfers the funds to the seller.

It is important that the seller receives the money only after the notary confirms that all the conditions of the transaction have been met. Such conditions include:

• preliminary registration of ownership rights in the name of the buyer;
• confirmation from the bank regarding the possibility of lifting encumbrances (if any);
• obtaining the manager's consent for making purchases and sales.

Registration of a new property owner

The registration of a new property owner proceeds as follows: as soon as the notary receives the full payment for the property, they submit an application to the land court to complete the registration process and cancel the preliminary entry. All information about the transaction is recorded in the electronic cadastre, known asland registerOwners can request extracts from this registry at any time, which allows them to monitor the current status of their property rights. Typically, the transaction process takes between two to four months.

Unpaid additional expenses

When purchasing real estate in Germany, it is important to consider additional unpaid expenses, which can amount to 10% or more of the final price of the property. The main categories of these expenses include:

• Tax on property transfer (property transfer taxThis tax varies from 3.5% to 6.5% of the purchase price, depending on the region.
• Notary servicesThe registration of property rights usually costs around 1.5-2% of the purchase price.

Commission for the real estate agent

Another significant item of expenditure isreal estate agent commission (brokerage feeSince December 2020, rules have been introduced that limit the agent's fee to 50% of the total commission, which can significantly affect the overall cost of the transaction. These changes are aimed at improving the transparency of the purchasing process for both German citizens and foreign investors looking to invest in the German real estate market.

Conclusion

In conclusion, it is worth noting that purchasing real estate in Germany is open to a wide range of interested buyers. Despite some challenges, such as higher deposits for foreigners and the need to verify the legality of financial resources, the buying process can be successfully navigated by following clear steps and recommended procedures.

Housing prices

Housing prices in the largest cities in Germany vary depending on many factors; however, in light of recent market changes and falling prices, many experts believe that now could be a good time to invest. It is expected that the market will stabilize in the coming years and prices will rise, making property purchases here a safe investment.

Reasons to buyreal estate

• Stability in the market:Real estate prices are expected to rise in the long term.
• Investment security:Despite the current fluctuations, real estate in Germany remains a reliable investment.
• Opportunities for foreigners:The purchasing process is available, although it requires meeting certain conditions.

Purchasing process

It is also important to understand that while the market offers opportunities, competition is high, so potential buyers should be patient and prepared for a thorough examination of properties. I hope the information presented in this material will help you navigate the process of purchasing everyday housing or commercial properties in Germany more effectively.

Tips for Buyers

• Be patient when searching for properties.
• Check the documents and property history before purchasing.
• Work with trusted specialists to simplify the process.

Acquiring real estate can be an important step for both investment and improving quality of life. Be cautious, follow the advice of experts, and make informed decisions.