Expensive Building Plots North to South

Builders of houses have to plan for rising land prices this year as well. The main problem is the stagnating allocation of land. An “unpleasant side effect” further exacerbates the situation. In southeastern Thuringia, according to a real estate report, the sum could even make you a landowner — one square meter of building space there costs ten euros on average. In some areas of the Saale-Orla-District it is also around 50 Euros. But that’s still a long way from Munich, where builders have to pay around 1,600 euros.

The fact that living space is scarce, especially in large German cities, is no longer only noticeable in house prices. Building land has become more expensive, says Anja Diers from the working group of the official expert committees. “Munich always has top prices.” But high prices were also found in other cities. In Wiesbaden, for example, according to the report, they are 840 euros per square meter, in Hamburg 480 euros.

For their new report, the experts evaluated purchase contracts. In total, real estate and plots of land changed hands for around 237.5 billion euros last year. The trend: Especially residential property in cities has become even more expensive. Interest rates remain low, says Diers. And the supply of housing is scarce, especially in cities, because many people are moving there. The prices for building land have also been rising for a long time. This becomes apparent when someone wants to build a small home. For a plot of land in the mid-price segment, builders had to pay an average of 108 euros per square meter nationwide — 16 euros more than in 2014. And with large regional differences.

So why is more land not being designated? Experts see various reasons. “Many local authorities no longer have the land at all. Think of Frankfurt or Munich,” says Matthias Waltersbacher from the Federal Institute for Research on Building, Urban Affairs and Spatial Development (BBSR). Plots of land cannot be multiplied at will. Every municipality has a slightly different situation.

Sometimes there are also concerns of the citizens. “Who wants to have a building site in front of their own house for years?” The real estate expert Michael Voigtländer from the employer-oriented research institute IW Cologne also sees several aspects. The municipalities would find it difficult to designate building land because they fear environmental damage and protests by citizens or because there are restrictive regulations at state level, Voigtländer wrote in a guest article in the “Frankfurter Allgemeine Sonntagszeitung”.

The fact that building land is so scarce also has another “unpleasant side effect”. Because the high prices led to the fact that also private owners held back their properties, Voigtländer wrote. If the price of land rises so quickly, it is worth the wait. Waltersbacher of the BBSR also explains that some owners deliberately held back with the sale. Some owners would also not know how they should invest the sales profit in times of low interest rates. “We have an investment crisis. Tangible assets are particularly in demand.”