Why is it so hard to buy a flat in Munich?

157 posts in this topic

Quote

Perlach, Maxvorstadt, Hirschgarten, Nymphenburg

 

Of these areas, my guess is that Perlach would be the cheapest. It is a bit farther away from the center. Not sure if it has a Munich address or not. I also think that if you are looking for a top floor 100 meter that doesn't need a lot or work or no work, you are looking at closer to a mil in the city.

0

Share this post


Link to post
Share on other sites
1 hour ago, mako1 said:

There are lots of locals who want to keep their apartment and cash out. So there are apartments that are for sale by owner/occupant who want to retain the right to live there for X more years. I find that the very strange (it makes sense for the person selling, but almost no sense for a buyer).

A lot of times this happens because an elderly couple have no heirs, and they want to get the cash out of their house but not leave it.  Most of the time, they have a contract that says you get the house when their both die, so it's a bit of a weird setup.  If they die quick, it's a good deal.  If not, it can be a very bad one.

 

Set ups like this (Erbpacht is another one that springs to mind) is the reason you really should know what you're doing before buying property here.

1

Share this post


Link to post
Share on other sites

The ones we met, who wanted to continue living in their house/apartment after the sale, simply wanted to get cash asap to buy something else.

 

Erbpacht. There is a new apartment in Lehel (one of the most expensive neighborhoods) with a monthly Erbpacht of 10€/m2!

1

Share this post


Link to post
Share on other sites
5 minutes ago, Hutcho said:

A lot of times this happens because an elderly couple have no heirs, and they want to get the cash out of their house but not leave it.  Most of the time, they have a contract that says you get the house when their both die, so it's a bit of a weird setup.  If they die quick, it's a good deal.  If not, it can be a very bad one.

 

Set ups like this (Erbpacht is another one that springs to mind) is the reason you really should know what you're doing before buying property here.

True, but not weirdier than many other form of investements. Of course it's not right for a couple who want to marry, leave their respective parents' home,  and create a family straight away. I imagine these are bought by some forms of banks / investement companies. And I would imagine too that these "contracts" can be just as well sold to whoever (probably another banks or the like, and of course the original old couple keep their rights unchanged).

Not too strange to me.

0

Share this post


Link to post
Share on other sites

Presumably the previous owners simply become sitting tenants and pay rent to the new owners? For an investment company, that's a great deal because they start getting rental income instantly without having to advertise etc., they don't have to worry about the tenants trashing the place, and can be reasonably assured that their tenants will stay put for several years at least.

0

Share this post


Link to post
Share on other sites

No, often they get to live there rent free until they die.  Other times they do pay a rent, but a fixed one that is much smaller than they would have to pay otherwise.  For this, the cost of the house is reduced.

 

There are a lot of different ways you can set up the purchase of property here.  You need to understand what you're getting into, and to do that, you need a good understanding of German or someone who has a good understanding and is on your side.

0

Share this post


Link to post
Share on other sites

Ah, OK. It's a straight equity release thing? That does happen in the UK, but only specialist investment companies are involved on the purchase side really.

 

There's no way I'd buy property abroad anywhere without engaging a lawyer or agent who spoke English and the local language - even if my language skills were pretty good. Always have an expert on your side, it will save you money in the ling-run. 

 

 

0

Share this post


Link to post
Share on other sites
24 minutes ago, Hutcho said:

No, often they get to live there rent free until they die. 

And of course this will be reflected in the price. As much as everythign else (age, health, ...). It happens not only in Germany.

0

Share this post


Link to post
Share on other sites

Right. All that being said - I have called the first company today (4 weeks on the Market in Munich) to ask about their development. (Nearby Hackerbrücke) The building is due in 2018! 4 weeks on the market. ALL of the top floor apartments are sold. That would probably be a challenge ... perhaps, it would be some time before I would have to actually go to the bank, let alone get the keys.

 

0

Share this post


Link to post
Share on other sites

For new builds, this is often the case.  Also, the bank will not loan you money that you only need in 2018 without paying "bereitsstellungszinsen" after about a year, which means paying the loan even though they haven't paid you any money.  This means that most people that buy into a project that is a fair way out end up paying double rent for quite a while.

 

Alternatively, you could risk it and not get the loan when you sign the contract and pay the deposit cash but then you risk the interest rates going up in the meantime and not being able to afford the property in the end.  Also, the builder might want to see that you have a loan before signing the contract.

 

I think it's a bad idea to come here and immediately start looking for something to buy.  The chances of you screwing yourself over are high.

3

Share this post


Link to post
Share on other sites

I rented for 9 years.  Then I bought the 13th place I visited.  Not very German.  Nor very Anglo-Saxon when I come to think of it.

 

However, "lager, lager, lager" (location x3) and a good surveyor worked for us.  Also, don't touch a ground floor with a barge-pole.  Germans are petrified of being robbed and they think ground floor means structural problems.  So you would buy cheaper and sell cheaper.

2

Share this post


Link to post
Share on other sites
16 hours ago, More tea, Vicar? said:

I rented for 9 years.  Then I bought the 13th place I visited.  Not very German.  Nor very Anglo-Saxon when I come to think of it.

 

What about those 9 years? Did you earn much more in the meantime? The house prices - do you not wish you bought 7 years ago?

 

I do realise that buying now, newbuild, rushing to snap the top floor (which does not seem to be available in any of the current projects under construction)  - perhaps an overpay. However, one wished to live now, wishes to enjoy the life where one wants now rather than after a long period of time. Hopefully, the prices are not going to go much down (every buyer's wish) 

0

Share this post


Link to post
Share on other sites

If you buy something that is being built, you don't have to put all the money down right away. There are all sorts of benchmarks, timelines, etc (as many have said, understand what is going on). However, the bank is not going to lend you the 25% or whatever downpayment without making sure you are good for the full loan. Great if you have time and cash on hand. If it all goes tits up (can happen), you will still have the loan, but may have some of the cash/credit left in an account (and all sorts of problems I imagine, trying to access it).

 

The folks who want to sell and continue to live in their houses are not accepting payments, if that is what some people think (that would be a reverse mortgage kind of thing). They want full payment at closing.

What is happening in Munich is someone owns a small place somewhere desirable and wants to build/buy something bigger, retire to Garmisch, whatever. So they sell the apartment and get a rental contract for X years (months, whatever) and stay there rent free for the length of the contract. You will get either a token fee or more likely nothing for the 'rent'. However, you will pay taxes on what the expected rent should be for the apartment you now own, with non rent paying tenant (the tax folks assume if you let someone live there, the obvious benefit to you is that the cost is discounted from the sales price and they use the standard rent price as the value).

0

Share this post


Link to post
Share on other sites
17 hours ago, Hutcho said:

I think you mean "Lage" unless you just want lots of storage space. 

 

Sorry, I was in Afrikaans/Beer mode. 

1

Share this post


Link to post
Share on other sites
2 hours ago, LucDeBerg said:

What about those 9 years? Did you earn much more in the meantime? The house prices - do you not wish you bought 7 years ago?

 

I do realise that buying now, newbuild, rushing to snap the top floor (which does not seem to be available in any of the current projects under construction)  - perhaps an overpay. However, one wished to live now, wishes to enjoy the life where one wants now rather than after a long period of time. Hopefully, the prices are not going to go much down (every buyer's wish) 

 

Good question LDB.  I had a very lucky situation cos I had a fairly nice and central flat with a great landlord.  He was an old retired Doctor who was quite wealthy and he was just interested in having a decent tenant.  I think he still thought in DMs and not €!

 

I do regret not buying earlier, because the major explosion in price (in Munich at least) occurred around 2006/7 onwards.  Now, with interest so low, things have remained expensive.  I bought in 2013 and paid a fully inflated top-of-the-market price.

 

But you've hit the nail on the head:   I only had money for some kind of deposit after 9 years of renting (and a redundancy payout!).

 

I personally do not see prices going down in the expensive parts of Germany, whatever my German mates may say.  The demand in popular cities for decent homes is going one way; north.  The world of home-ownership arrived in Germany and people are now parking their money in homes, just like they always have done in other places like London, New York and Paris.

0

Share this post


Link to post
Share on other sites
On 15/12/2015 12:18:45, mako1 said:

Germans only trust 'beton gold' as a secure savings.

  

I disagree. One of the reasons for the low home ownership rate in Germany is that many Germans don't think that way. Although property prices have risen a lot lately in Munich, Stuttgart, Berlin and other cities in the last few years, historically, German house inflation has been very low compared to that of other industrialized nations. See this graph, which proves my point. Germans know this and many, including some that I know personally, were affected by the [small] boom and [big] crash in the new states after reunification, not to mention the decades-long stagnation or even decrease in real estate prices in most rural areas in Germany.

 

On 15/12/2015 12:18:45, mako1 said:

Maklers are great, you can basically discount anything they say. They will tell you the sun rises in the west if it would help make the sale.

 

You are so right!

0

Share this post


Link to post
Share on other sites

Newly built apartments are nice to live in but they a have disadvantage, they are expensive and have some depreciation.

 

e.g in Munich at an ok location, a vacant, 80-100 sqm, 3 room apartment from 1960s onwards building is around 300-400k (depending upon location and its condition) and same apartment from 2000 onwards is around 400-450k while the new are at 500k.

 

if someone now buys a new apartment for 500k, I am not sure after 5 years its value will increase let say 25% even if in general property prices increase by 25%. 

 

on a side note i think the people who bought houses or apartments 5-7 years ago with around 30-40% down payment definately are in advantage now as since then the prices have gone up by around 30-40%. This increase may not continue in the next 5 years if interest rates go up now. If the interests rates go up quickly (which is unlikely though) the bubble might burst because there will be very few buyers and those wishing to sell will have to lower the prices.

0

Share this post


Link to post
Share on other sites

Hi All,
I am in a catch22 situation. Living in Munich for almost 4 years on a rented apartment (paying around 1500) and suddenly we thought lets buy an apartment with only 10% equity. 
Most of the new apartments cost more than 600 and we got a good apartment for 500k, including car park, which is quite big (94) and renovated quite nicely and in a very good area.

 

However, the apartment is from 1974. I am not sure if there is any major disadvantage to shell out 500k for a 1974 apartment. 

 

Will there be a price rise for such an apartment down the line, or will it always depreciate with age?

 

 

0

Share this post


Link to post
Share on other sites

That looks like a great deal to me and prices in Munich only go up. There are a lot of things to check on though. Try to talk to some other owners that live there. What part of Munich?

1

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!


Register a new account

Sign in

Already have an account? Sign in here.


Sign In Now