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Germany's residential property market shows clear signs of recovery in mid-2025.
After the significant correction of 2022-2023, property prices across Germany are rising again, with apartments up 3.2%, single-family homes increasing 4.7%, and multi-family homes leading with an 8.7% year-over-year growth.If you want to go deeper, you can check our pack of documents related to the real estate market in Germany, based on reliable facts and data, not opinions or rumors.
Property prices in Germany are indeed going up, with residential properties showing 0.9% to 3.5% increases nationally and multi-family homes leading growth at 8.7% year-over-year.
Despite recent gains, prices remain 11-22% below their 2022 peaks, indicating the market is recovering rather than overheating, with forecasts predicting continued moderate growth of 3-3.5% annually through 2026.
| Metric | Current Status | Year-over-Year Change |
|---|---|---|
| National Average Price (All Residential) | €4,161/m² | +0.9% to +3.5% |
| Existing Apartments | €3,403/m² | +1.6% |
| New Build Apartments | €5,478/m² | +2.9% |
| Single-Family Homes | - | +4.7% |
| Multi-Family Homes | - | +8.7% |
| Munich Average (Existing) | €8,476/m² | +3.7% |
| Berlin Average (Existing) | €5,451/m² | +2.7% |
| Building Permits | - | -13.4% |
| Construction Costs | - | +1.6% |
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
How much have residential property prices in Germany increased over the past 12 months?
Residential property prices in Germany have shown consistent growth across all segments over the past year.
As of June 2025, the data reveals that apartments have increased by 3.2% year-over-year, while single-family homes demonstrate stronger performance with a 4.7% rise. Multi-family homes lead the market with an impressive 8.7% annual increase, reflecting strong investor demand for income-producing properties.
The nationwide average increase across all residential property types ranges from 0.9% to 3.5%, depending on the specific segment and location. This variation reflects the diverse nature of Germany's property market, where urban centers typically outperform rural areas.
For existing apartments specifically, the national average price stands at €3,403 per square meter with a 1.6% annual increase, while new build apartments command €5,478 per square meter with a 2.9% growth rate.
These figures indicate a market that has stabilized after the turbulent period of 2022-2023 and is now showing steady, sustainable growth.
Which German cities are experiencing the fastest property price growth in 2025?
Berlin leads Germany's property price growth with an impressive 7% annual increase, pushing average prices to €6,200 per square meter.
This surge in the capital reflects renewed investor confidence and the city's continued attractiveness to both domestic and international buyers. Frankfurt follows as the second-fastest growing market with a 4.8% increase for existing apartments, reaching €6,116 per square meter, driven largely by its status as Germany's financial hub and the ongoing demand from banking professionals.
Cologne demonstrates robust performance with 5.2% growth, benefiting from its strategic location and diversified economy. Munich, despite already being Germany's most expensive city, maintains steady growth at 3.7% for existing apartments, with prices now at €8,476 per square meter.
Hamburg presents a more nuanced picture, with existing apartment prices slightly declining by 0.4%, but new builds surging 7.7% to €8,589 per square meter, indicating a clear preference shift toward modern, energy-efficient properties in Germany's second-largest city.
It's something we develop in our Germany property pack.
What are the current average property prices per square meter in major German cities?
Munich remains Germany's most expensive city with existing apartments averaging €8,476 per square meter and new builds commanding €11,454 per square meter.
The premium pricing in Munich reflects its status as Bavaria's economic powerhouse and continued strong demand despite already elevated price levels.
| City | Existing Apartments (€/m²) | New Builds (€/m²) |
|---|---|---|
| Munich | 8,476 | 11,454 |
| Frankfurt | 6,116 | 8,236 |
| Berlin | 5,451 | 8,300 |
| Hamburg | 5,560 | 8,589 |
| Cologne | 4,836 | 6,879 |
| Düsseldorf | 4,583 | 7,654 |
| Stuttgart | 4,527 | 8,320 |
| Leipzig | ~3,000 | ~4,500 |
| Bremen | ~2,800 | ~4,200 |
Which property types are seeing the biggest surge in prices during 2025?
Multi-family homes dominate the German property market's price growth with an exceptional 8.7% year-over-year increase.
This surge reflects strong institutional investor interest and the income-generating potential of these properties in a market with persistent rental demand. Single-family homes follow with a respectable 4.7% growth rate, driven by families seeking more space in suburban areas and the ongoing trend toward remote work arrangements.
Apartments, while showing the most modest growth at 3.2%, still demonstrate healthy appreciation across both existing and new build segments. Within the apartment category, newly built units command a significant premium, averaging €5,478 per square meter nationally compared to €3,403 per square meter for existing apartments.
This €2,075 per square meter premium for new builds reflects buyer preferences for modern amenities, superior energy efficiency, and lower maintenance requirements. The divergence in growth rates between property types also indicates a market where investors are actively seeking yield-producing assets, particularly multi-family properties that can generate steady rental income.
The trend suggests that properties with multiple income streams are increasingly viewed as defensive investments in an uncertain economic environment.
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How do current property prices in Germany compare to the 2022 peak?
Despite recent gains, German property prices remain significantly below their 2022 peak levels.
Apartments currently sit 11.4% below their peak in nominal terms, which translates to an 18.2% decline when adjusted for inflation. Single-family homes show a similar pattern, trading 12.9% below peak levels nominally and 19.6% when inflation-adjusted.
Multi-family homes have experienced the most substantial correction, remaining 21.6% below their 2022 highs in nominal terms and 27.6% when accounting for inflation. These figures clearly indicate that the German property market is still in recovery mode rather than experiencing a new bubble.
The gap between current prices and previous peaks provides a buffer for continued growth without immediate concerns about overvaluation. This situation presents opportunities for buyers who missed the previous cycle's peak, while also suggesting that the market has room for sustainable appreciation before reaching concerning levels.
The inflation-adjusted figures are particularly telling, as they reveal the real purchasing power loss that property owners have experienced since 2022.
What impact is the new CDU/CSU-SPD government having on property prices as of May 2025?
The new conservative-led coalition government has introduced several market-stimulating measures since taking power in May 2025.
The centerpiece of their housing policy includes comprehensive investment and tax relief packages designed to incentivize both new construction and renovation projects. These measures aim to address Germany's chronic housing shortage while stimulating economic activity in the construction sector.
The government has simplified funding programs by consolidating various housing subsidies into streamlined channels, reducing bureaucratic hurdles for developers and homebuyers alike. A particularly significant move has been the temporary reinstatement of EH-55 energy efficiency standards, providing a more achievable target for builders while still maintaining environmental commitments.
Public guarantees have been introduced to reduce financing costs for developers, effectively lowering the risk premium required by banks and making projects more financially viable. The extension of rent controls until the end of 2029, while potentially limiting rental income growth, has provided market stability and prevented rapid rent escalation that could destabilize the broader economy.
These policies collectively aim to boost housing supply while maintaining affordability, potentially moderating future price increases while ensuring steady market growth.
What is the current supply-demand situation in Germany's residential property market?
Germany faces a severe and worsening housing supply shortage that continues to drive prices upward in 2025.
Building permits fell dramatically by 13.4% year-over-year in 2024, signaling that the supply crisis will persist well into the future. This decline marks the fifth consecutive year of decreasing construction output, creating a compounding effect on the housing shortage.
New housing completions remain far below government targets, with actual deliveries falling short by approximately 200,000 units annually. Major cities experience the most acute shortages, with Munich, Berlin, Frankfurt, and Hamburg seeing vacancy rates below 1%, effectively creating a seller's market where buyers compete intensely for limited inventory.
The supply-demand imbalance is further exacerbated by demographic trends, including continued urbanization and smaller household sizes, which increase the number of units needed. Immigration, both from within the EU and from third countries, adds additional pressure to already strained urban housing markets.
It's something we develop in our Germany property pack.
How are construction costs and building regulations affecting property prices in 2025?
Construction costs increased by 1.6% year-over-year, adding continued pressure to new build prices across Germany.
While this rate of increase has moderated from the double-digit inflation seen in 2022-2023, it still represents a significant burden on developers and ultimately translates to higher prices for buyers.
| Factor | Impact on Prices |
|---|---|
| Material costs | Moderate increase due to stabilizing supply chains |
| Labor shortages | Significant - driving wage inflation in construction |
| Energy efficiency requirements | Adding 5-10% to construction costs |
| Building permit delays | Creating artificial scarcity |
| Real property tax reform | Creating uncertainty for investors |
We made this infographic to show you how property prices in Germany compare to other big cities across the region. It breaks down the average price per square meter in city centers, so you can see how cities stack up. It's an easy way to spot where you might get the best value for your money. We hope you like it.
What are property price forecasts for Germany through 2026 and beyond?
Expert forecasts indicate continued but moderating price growth for the German property market.
For 2025, analysts predict a 3.5% growth rate, followed by 3.0% increases in both 2026 and 2027. This steady appreciation reflects a market finding its equilibrium after the volatility of recent years.
In the medium term spanning 2025-2028, upmarket residential properties in major cities could see cumulative growth of 7-13%, with premium locations and high-quality assets outperforming the broader market. Secondary cities may experience stronger percentage gains due to their lower base prices and improving infrastructure connections to major urban centers.
The long-term outlook suggests stabilization with annual growth rates settling at 2-3%, roughly in line with general inflation expectations. Urban centers will continue to outperform rural areas, driven by ongoing urbanization trends and concentrated economic opportunities.
These forecasts assume no major economic shocks and continued government support for the housing market through favorable policies and infrastructure investment.
How are sustainability and energy efficiency regulations impacting property values in 2025?
Energy-efficient properties command significant premiums in Germany's 2025 property market.
New builds meeting the latest sustainability standards achieve 15-20% price premiums compared to standard construction, reflecting both buyer preferences and long-term operating cost savings. Properties that have undergone comprehensive energy renovations to achieve high efficiency ratings command 10-15% premiums over comparable unrenovated units.
Conversely, properties requiring substantial energy upgrades face 5-10% discounts, as buyers factor in renovation costs and potential regulatory compliance issues. The Building Energy Act (GEG) compliance has become mandatory for all property sales, creating transparency but also highlighting deficiencies in older building stock.
EU taxonomy requirements increasingly influence institutional investment decisions, directing capital toward sustainable properties and away from energy-inefficient assets. Buyers show strong preferences for properties equipped with heat pumps, solar panels, and superior insulation, viewing these features as both cost-saving measures and future-proofing investments.
This trend is accelerating the bifurcation of the property market between modern, efficient buildings and older stock requiring significant investment.
What are the main risks that could affect German property prices in the next 12 months?
Several key risks could impact German property prices over the next year.
An economic recession poses a medium probability risk that could reduce prices by 5-10%, particularly if unemployment rises significantly or consumer confidence plummets. Interest rate volatility, while currently assessed as low-to-medium probability, remains a concern as each 1% rise in rates reduces buyer affordability by approximately 10%.
| Risk Factor | Probability | Potential Impact |
|---|---|---|
| Economic recession | Medium | Could reduce prices by 5-10% |
| Interest rate volatility | Low-Medium | Each 1% rise reduces affordability by ~10% |
| Construction sector crisis | High | Would worsen supply shortage, pushing prices up |
| Regulatory changes | Medium | Could alter investor returns ±5% |
| Geopolitical instability | Low-Medium | May increase safe-haven demand |
What are current mortgage rates and lending conditions for property buyers in Germany?
Mortgage conditions in Germany have improved significantly from their 2023 peaks.
Ten-year fixed rates currently range from 3.5-4.0%, representing a substantial decrease from the 4.5% rates prevalent in 2024. Variable rates offer even lower entry points at 3.0-3.5%, though most German buyers traditionally prefer the security of fixed-rate mortgages.
Loan-to-value ratios typically range from 60-80% for residents, with banks showing increased flexibility compared to the restrictive lending of 2023-2024. Foreign buyers face stricter requirements, generally needing 30-40% down payments as standard, reflecting perceived higher risk profiles.
Processing times have normalized to 4-6 weeks for mortgage approval, down from the extended periods seen during the market turbulence. Income requirements remain conservative, with banks typically requiring that monthly payments not exceed 35% of net household income.
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Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
Yes, property prices in Germany are indeed going up across all major segments, with the residential market showing consistent growth ranging from 0.9% to 8.7% depending on property type and location.
While current prices remain 11-22% below their 2022 peaks, the combination of severe supply shortages, stabilizing interest rates at 3.5-4.0%, and supportive government measures including tax relief packages and simplified funding programs points to continued moderate growth of 3-3.5% annually through 2026, making now a potentially opportune time for buyers before prices recover fully to previous highs.
Sources
- Kiel Institute for the World Economy
- Global Property Guide
- Julius Baer Property Market Report Germany Q1 2025
- German Real Estate Index (GREIX)
- Centrarium Real Estate Analysis
- Gleiss Lutz Real Estate Update 2025
- Hogan Lovells Politics of Housing in Germany
- Reuters Germany Property Market Analysis
- JLL Housing Market Overview
- BusinessWire Germany Construction Industry Report 2025