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Frankfurt’s property prices rise despite the pandemic

As the city continues its drive to become Europe’s financial capital, property in Frankfurt, Germany, is increasingly becoming less affordable. 

Low interest rates and a high level of pent-up demand from renters waiting years to buy a place they can afford have meant that prices for flats in the city have kept rising in the past year, despite the pandemic’s hit to the economy and people’s livelihoods. 

In the third quarter of 2020 prices for new apartments averaged €7,200sqm, up 8% from the same quarter of 2019, according to Bulwiengesa, a German real estate consultancy. 

Since 2014, prices for all apartments in Frankfurt have been growing at about 10% per year, according to JLL. However, such has been the pace of recent growth that, last year, UBS ranked Frankfurt as having the second-most overvalued housing market of any major city in the world, behind fellow German city Munich, according to its Global Real Estate Bubble Index. 

As one of Europe’s biggest financial centres, Frankfurt attracts foreign workers and high-earning employees. Developers have also taken advantage of economic growth to invest in the upper segment of the market, contributing to house price inflation, UBS says.

But a correction phase will likely emerge when state subsidies linked to Covid-19 are withdrawn and pressure on income increases from recession.

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