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German property prices are rising again
Germany’s housing market has delivered its clearest signal yet that the price correction may be over—at least for now. According to figures released this week by the Federal Statistical Office (Destatis), residential property prices rose by 3.8% year-on-year in Q1 2025—the sharpest increase since the downturn began in late 2022.
This marks the second consecutive quarterly gain, following a modest 1.9% uptick in Q4 2024. It’s a notable reversal after six quarters of declines, with the national average still down 1.5% for full-year 2024 compared to 2023. But momentum is clearly picking up across most regions and asset types.
The strongest growth was seen in larger independent cities outside the traditional Top 7, where condominium prices surged 6.1% year-on-year and 2.9% compared to Q4. In the Big Seven (Berlin, Hamburg, Munich, Cologne, Frankfurt, Stuttgart, Düsseldorf), prices for owner-occupied apartments rose 3.8% annually and 2.4% quarter-on-quarter.
In more densely populated rural districts, prices for apartments climbed by 4.1% compared to Q1 2024, while gains were more muted (+0.3%) on a quarterly basis. Sparsely populated rural areas remained the exception: apartment prices there fell by 0.8% year-on-year and 1.4% from the previous quarter.
Detached and semi-detached houses also became more expensive across much of the country. House prices in larger cities outside the Top 7 rose 3.4% annually, while rural areas—long seen as laggards—registered quarterly increases of up to 2.2%.
Analysts cite supply constraints as a key driver. “The number of new homes being built is falling, while construction costs remain stubbornly high,” said a spokesperson from the BVR, which forecasts residential property prices to rise 3.2% in 2025 and a further 3.1% in 2026.
Meanwhile, brokers are increasingly reporting that energy efficiency is being priced into deals, particularly in urban markets. In several cases, assets in higher efficiency classes are commanding premiums of 5–10% over comparable lower-rated stock—a shift driven by both tenant demand and tightening regulatory standards.
REFIRE: While too early to declare a full-blown rebound, these latest figures suggest that the worst of the correction may be behind us—particularly in urban markets with constrained supply. Whether the momentum will last depends on affordability ceilings and the depth of the new-build pipeline. For now, this may be the last quarter where prices still look cheap relative to fundamentals.