Two factors at work here:
Walthers have been increasing in price over the last few years for a number of reasons. Wartime P-38s, which routinely sold for $100 when I was younger, now run $500-$600 for good examples. Walther just isn't a big company and the US was never a major market for them.
German-made PPKs are more "desirable" for collectors, the .22 models are very rare, and the alloy-framed models even rarer. The cheapest I've seen a .22 model in the past year was $500, and it lasted less than two weeks at the dealer. It was a steel-framed model, too.
If you just want a nice .22, there are better alternatives. If you collect Walthers, then $600 is about average, from what I've seen.
Ken Strayhorn
Hillsborough NC