2020 proved to be an exceptional year thanks to the coronavirus pandemic. Contrary to the expectations of some industry experts, however, this did not reverse the growth of prices paid for properties in Hamburg’s and Lüneburg's housing stock. Efforts to contain the coronavirus and their ensuing consequences did not prevent prices in this segment of the market from continuing to climb once the inertia of the spring-time shock had worn off. “Despite the coronavirus, prices have reached the levels we predicted for this year. Even before the pandemic, attractive houses and apartments in Hamburg as well as Lüneburg were hugely sought-after. And coronavirus acted as a turbo-boost to demand,”
concludes Lars Seidel
, managing director of Grossmann & Berger, a property services provider.
In both cities prices rose as forecasted
The average increase in the price of existing houses** in Hamburg reached the predicted 2.1 % for properties located within city limits and 6.3 % for those in the environs.
Inside Hamburg’s borders previously existing apartments* (condominiums) cost 7.0 % more on average; in the environs the increase was 6.3 %.
As forecast, average prices for existing houses** in the city of Lüneburg rose by 6.9 % and the environs posted 7.2 % growth.
In the case of existing apartments* (condominiums)* an average price increase of 6.5 % was noted within the city and of 7.3 % in the environs.
House prices in Lüneburg’s top locations, however, grew by appreciably more than expected.
Prices now impossible to forecast
“As no-one knows how the pandemic will develop, it is not possible to predict in any meaningful way what housing in different locations will cost in 2021. It all depends on how long the restrictions last, when a large proportion of the population has been vaccinated and how severe the economic fall-out is,”
. For this reason Grossmann & Berger is postponing the publication of its annual survey of the market for existing residential properties in Hamburg and Lüneburg until Spring 2021.
Receptiveness gives way to the tedium of working from home
Coronavirus has merged the separate spheres of work and home - either for the first time or to an even greater extent than before, depending on whether working from home was normal corporate practice or not. Andreas Gnielka
, head of department residential properties stock at Grossmann & Berger, observes that, “Initially most people were really pleased with the greater autonomy that working from home brought, even if the circumstances generated by the coronavirus situation were far from pleasant. After a longer period of working from home, however, the limitations of this method of organizing the working day became much clearer. Meanwhile, many employees are noticeably less enthusiastic than they were to start with.”
Often people do not have enough space for quiet, undisturbed work at home and they miss the established work routines and personal exchange with colleagues. Moreover, not all homes outside city areas have a good broadband connection, which can make working from home extremely tedious.
More room, more surrounding space
Therefore, there has been a significant change in the type of homes now being sought in Hamburg and Lüneburg.
Customers want more room, a more spacious layout, a separate office or guest room and a balcony or garden.
Increasingly, potential buyers are looking for building land and single-family homes. In future the prices of single-family homes are set to rise more rapidly than those of other residential properties.
The environs and locations on the city periphery have become much more popular.
“Prior to the pandemic, buying property in the environs was often a compromise response to high prices in Hamburg. But now many more buyers are actively seeking houses in the environs,” says Gnielka. “However, we do not believe that working from home will spark a permanent exodus from the city. In many cases a move will not offer a fully satisfactory package. Instead, we assume that the merging of work and home spaces will continue and that we are indeed now witnessing a paradigm shift.”
Digitalization gains traction in the property business
The pandemic has also greatly hastened the digitalization of the property business. “Apart from our existing digital property evaluation tool which provides an initial idea of pricing, we now offer a comprehensive contactless price-finding service. Since the pandemic started, potential buyers have used video phone calls or virtual 360-degree tours to view properties they are interested in. Nowadays, clients do their research online before they contact us in person,” comments Seidel. The property services provider has accordingly expanded its digital advisory services for longer-term use. “It is becoming even more important to respond nimbly to new challenges than it was before the pandemic, especially in view of additional legal provisions such as splitting the agency commission on house purchases.”
The market survey for stock residential properties in Hamburg and Lüneburg 2019/2020 are still available (in German only) on our website. The next editions are planned for Spring 2021.
G&B Price Trend:
Assessment of the attainable prices for standard properties, well constructed and fitted out, in good residential neighbourhoods:
* Standard condominium/apartment: vacant, 3 rooms, around 80 m² living space, 1st upper floor, lift (elevator), fitted kitchen
** Standard single family house: detached, with cellar, at least 130m² of living space, plot size typical for the location