House prices in Frankfurt are being fuelled by wage growth and people relocating to the financial capital, according to a report by mortgage lender Hüttig & Rompf.
The average price paid for residential property has increased by more than €200,000 in two years to €541,300. At the same time, the average net household income has gone up by €1,600 a month to €4,400, with one in four buyers earning €8,000 or more. In 2017 only 9% of home buyers were in this income bracket.
The proportion of international buyers has increased from 22% to 37% in the two-year period. 'This shows the international significance of Frankfurt and the impending Brexit effect,' said CEO Ditmar Rompf.
'A number of companies have moved from the UK to Frankfurt and their employees are looking for homes in the Hessian financial metropolis.'
Buyers are more likely to opt for newbuild properties than two years ago, with existing houses accounting for 46% of purchases compared to 55% in 2017. At the same time, the squeeze on space means the average home is around one-third smaller at 94 m2 rather than 129 m2.
Buyers are also investing more of their own capital in their own homes. The average deposit has risen by €60,000 to €144,000 in two years, an increase of 72%. 'People who invest more in their mortgage get better loan conditions from banks and savings banks. This could be in the form of a lower interest rate,' said Rompf. 'Since purchase prices are so high, customers need to raise more equity to afford the monthly rate.'
Home owners in the city now pay an average of €1,575 a month in capital and interest on their mortgages, compared to €1,082 in 2017. However, rising incomes mean mortgages have only risen fractionally as a proportion of earnings, from 25% to 26%.
