What the same rent supports
| Interest-rate measurement | Interest rate | Purchase price at €7.33/m² rent |
|---|---|---|
| 2021, Bundesbank annual average | 1.09% | around €3,394/m² |
| August 2026, Bundesbank average | 3.81% | around €1,656/m² |
| Interhyp offered rate, loan-to-value ratio above 90% | 4.63% | around €1,435/m² |
The same table, with an explanation and the formula for calculating the figures for your own rent, is in the guide: “What does this mean per square metre?”
Why interest rates make such a difference
The loan payment consists of interest and principal repayment. If interest rises while the initial repayment rate stays the same, an unchanged rent leaves less room for the purchase price. At the 2021 interest rate, the rent covered the payment on a price of up to 38.6 times the annual rent excluding service charges; at 4.63% interest, up to 16.3 times. This multiple depends on interest and repayment rates, not on the amount of rent.
For a rented property generating €1,500 a month in rent excluding service charges, this gives a purchase price of around €294,000, compared with around €695,000 at the 2021 interest rate.
“If the rent does not cover the loan payment when the entire purchase price is financed, the buyer has to contribute money every month. This calculation therefore belongs in every discussion about the asking price of a rented apartment”
Data basis & methodology
Purchase price = monthly rent excluding service charges × 12 / (interest rate + initial principal repayment rate). Interest and repayment rates are entered as decimals. The 2021 annual average was calculated from the twelve Bundesbank monthly figures; the calculation uses the value before rounding to 1.09%. The rent of €7.33/m² is the average of the rent-index sample, not of all Dresden rental agreements. The published effective interest rates are used as the calculation rates for simplicity. The model excludes incidental purchase costs, ongoing ownership costs and taxes. Equity reduces the amount borrowed; management and maintenance reduce the rent available for loan payments. The value of an individual apartment cannot be inferred from this calculation.
The calculation in three charts
Values as a table
| Interest rate | Purchase price per m² |
|---|---|
| 2021: 1.09% (Bundesbank, annual average) | 3,394 €/m² |
| August 2026: 3.81% (Bundesbank, provisional) | 1,656 €/m² |
| 28 Sep–4 Oct 2026: 4.63% (Interhyp, LTV >90%) | 1,435 €/m² |
Sources: City of Dresden, documentation for the 2025 rent index, Table 9 (€7.33/m²); Deutsche Bundesbank, MFI interest-rate statistics, as of 1 October 2026; Interhyp AG, offers 28 September to 4 October 2026. Purchase prices per square metre: own calculation, 1.5% initial annual principal repayment, entire purchase price financed.
Values as a table
| Annual interest rate | Supported multiple at 1.5% initial repayment |
|---|---|
| 1 % | 40.0 |
| 2 % | 28.6 |
| 3 % | 22.2 |
| 4 % | 18.2 |
| 4.63 % | 16.3 |
| 5 % | 15.4 |
| 6 % | 13.3 |
| 7 % | 11.8 |
Supported purchase price multiple = 1 / (interest + repayment rate), using 1.5% initial annual principal repayment and full purchase price financing. Own calculation. Interest rates: Deutsche Bundesbank, MFI interest-rate statistics, as of 1 October 2026 (2021); Interhyp AG, offers 28 September to 4 October 2026.
Values as a table
| Year | Annual average interest rate |
|---|---|
| 2015 | 1.837 % |
| 2016 | 1.596 % |
| 2017 | 1.667 % |
| 2018 | 1.718 % |
| 2019 | 1.365 % |
| 2020 | 1.092 % |
| 2021 | 1.092 % |
| 2022 | 2.409 % |
| 2023 | 3.730 % |
| 2024 | 3.528 % |
| 2025 | 3.498 % |
| 2026 (to August) | 3.693 % |
| August 2026, provisional | 3.81 % |
Source: Deutsche Bundesbank, MFI interest-rate statistics, effective interest rates for new housing loans to households, initial fixed-rate period of over 5 and up to 10 years, as of 1 October 2026, August 2026 provisional. Annual averages: own calculation.
The charts may be used with attribution to Immobilienpartner Sachsen. The calculator with adjustable interest and initial repayment rates is in the article: How interest rates put pressure on purchase prices.
Sources
- City of Dresden: documentation for the 2025 rent index, Table 9.
- Deutsche Bundesbank: MFI interest-rate statistics, series SUD118, new housing loans with an initial fixed-rate period of over five and up to ten years, as of 1 October 2026; August 2026 provisional.
- Interhyp AG: 4.63% effective annual interest for a loan-to-value ratio above 90% and a ten-year fixed-rate period, offers from 28 September to 4 October 2026.
- Calculations: Immobilienpartner Sachsen.
About Immobilienpartner Sachsen
Immobilienpartner Sachsen is an owner-run Dresden estate agency focused on selling residential property in Dresden and the surrounding region. As a regional sales agent, we combine personal service with data-driven market analysis, from long-term land-value series and construction activity to district demographics. These proprietary data sets are the basis of our market reports and press releases. More at www.immobilienpartner-sachsen.de.
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