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Senior Financial Consultant
Christian is an expert in real estate and its financing. He knows the Stuttgart real estate market like no other and puts his experience at your disposal. Due to his excellent English language skills you have a contact person who understands you and can answer all your questions.
Get a more detailed overview of the city you are interested to invest. Rather than just looking at the city as a whole, go that bit deeper. Look at the different districts, look at the property prices and how they have been impacted by changes i.e gentrification that has taken place in the last years. This could be a good indication of the impact on the prices for the future.
A good indication of how realistic the property prices are, can be gauged on how long properties stay on the market before being sold. When properties are slow to sell , this could indicate room for negotiation! When properties are moving quickly, then you have to move quickly too!
Macroeconomic data can also provide some valuable information, particularly when you are looking at it from a ‘supply /demand’ perspective. Comparing the number of households in the district and the number of housing units available, is a good indicator how the property prices could develop. When the demand is higher than the number of properties available on the market, prices will rise.
The age of the inhabitants in a district will certainly have an effect on the property prices. Districts with a younger age group, those finishing their studies starting new jobs, starting families etc create a demand for cafes , restaurants, entertainment outlets, kindergartens, organic markets etc enabling new businesses for flourish. This in itself creates a further demand as more people want to be part of this and so, is then reflected in the property prices. Back to the supply/demand.
When a district has a healthy employment rate, therefore a stronger purchasing power, this will undoubtable have a more positive effect on the future potential for property.
The average net income in a district to some degree can be related with the employment status, but of course, a lower net income district with a high employment rate with young residents could also become a future area for development. Sometime we also have to take a longer term view.
By considering the number of people per household in a district, this will help determine which district best match with your requirements and investment strategy. Buying a 3 room apartment for a family could also work well for student sharing accommodation, if there is a high student presence in that district and the demand is there.
Despite the recent slowdown in population growth, the City of Stuttgart expects the population to grow by a further 38,000 up to 2030. In view of the growing demand for housing and existing deficit, the volume of completions remains below the estimated requirement for new residential construction. Although the number of completions in 2018 (1,850 apartments) was significantly higher than the 10-year average (1,630 apartments per annum), there was a 13% fall in the volume of completions year-onyear. Yet, despite the increase in the number of building permit granted in 2018 (2,100 apartments), no noticeable easing of tensions in residential construction is to be expected over the coming years. Due to the scarcity of large development sites, new living space can only be created essentially through re-densification and conversion. However, as a result of the capacity bottlenecks in development land, even the largest development projects in the city will offer a relatively small number of residential units. The potential new urban neighbourhood in the east of Stuttgart on the site near the Gaskessel (gas storage tank) with a potential of 2,500 apartments is therefore an exception, but will not bring rapid, immediate relief to the housing market due to the development period. In future, it will probably be necessary to rely on the large-scale conversion of commercial space to residential use and the incorporation of the periphery to meet the high excess demand.
Average asking rents in Stuttgart have risen by around 1.0% to €14.55/sqm/month compared to the same period last year, despite falling slightly during the year. Rental price rises have therefore weakened considerably compared to the 5-year average of 5.8% and now lie below the general inflation rate. While the prime segment recorded a decline in rental prices of around 8%, the new-build segment recorded the strongest growth of just under 5.4%. This rental price trend is reflected across all submarkets. While declines are being observed to the west of the city centre and in parts of Weilimdorf and Cannstatt, strong increases can be found in asking rents in the south of the city and in the neighbourhoods adjoining the city centre to the north and east. Due to insufficient new residential construction and existing excess demand, further albeit moderate price increases are to be expected in the coming years.
While momentum in the rental housing market in Stuttgart is slowing down, it is sustained in the condominium market, although a slight slowdown is also being observed here. The average purchase price for a condominium apartment is €4,460 per sqm, which is around 5% higher than in the same period last year. With an increase of more than 10% compared to the previous year, the strongest price rises are being observed mainly in the lowest purchase price categories, while purchase price growth in the prime (2% per annum) and new-build segments (1%) has been significantly lower over the past 12 months. This trend is particularly evident in an analysis of purchase prices in the various submarkets. A slight decline can be observed in the areas on the northern and southern peripheries of the city, while neighbourhoods immediately adjoining the city centre to the north are commanding average asking prices in excess of €6,000 per sqm. Variations in price levels and shifts in demand across the submarkets in the city continue to affect market dynamics in the market for condominium apartments.