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New Town Hall, Leipzig
The Hamburg Institute of International Economics (HWWI) expects residential property prices in Germany to continue their modest climb over the next decade, with an average real annual growth of 0.4% across all counties and independent cities until 2035. While this steady upward trajectory will bolster existing homeowners, it also signals significant regional disparities that professional investors would be wise to navigate with caution.
Leipzig Leads, but Rural Regions Falter
The findings, published in the latest Postbank Wohnatlas 2025, paint a nuanced picture. Leipzig stands out as the star performer, with forecasted average annual price growth of 1.9%. According to Manuel Beermann, Head of Product Management Real Estate at Postbank, “This robust growth is driven by rising incomes, a rejuvenating population, and comparatively low entry prices. In 2024, the average price per square metre in Leipzig stood at €3,231—significantly below that of other large cities.”
Beyond Leipzig, the growth momentum is concentrated in urban hubs and the commuter belts surrounding Germany’s seven metropolitan areas. Districts such as Barnim, Oberhavel, Teltow-Fläming, and Dahme-Spreewald in Brandenburg are all projected to see real price increases of over 1% per year. The district of Konstanz in Baden-Württemberg and Herzogtum Lauenburg in Schleswig-Holstein also feature prominently on the list.
However, the picture is far from uniformly rosy. The HWWI forecasts declining real purchase prices in three federal states—Saxony-Anhalt (-0.4%), Thuringia (-0.2%), and Saxony (-0.1%). Beermann attributes this to demographic headwinds: “In these areas, population is shrinking and aging at an above-average rate, particularly in rural districts. While some urban centres in these states buck the trend, overall demand pressures remain subdued.”
Major Cities Maintain Resilience
The study underscores the enduring appeal of Germany’s major urban markets, with average annual price growth in cities of over 100,000 inhabitants outside the Big Seven reaching 0.6%. Medium-sized cities are projected to see gains of 0.5%, while the top seven metropolitan areas lag slightly behind at 0.4%. Dresden and Erfurt, alongside Leipzig, are the eastern German cities with the most dynamic forecasted growth—1% and 0.9% respectively.
While these average figures offer a reliable compass for institutional investors, Beermann strikes a cautionary note: “Our forecasts show average values for entire regions. In individual cases, prices can vary greatly depending on local factors such as transport links and amenities.” For those prioritising yield over owner-occupation, this granular differentiation remains paramount.
For real estate investors, these findings reinforce the thesis that demographic and economic fundamentals will continue to dictate long-term residential market performance. Regions with strong job markets, positive net migration, and relatively affordable entry points are likely to outperform national averages. The most promising investment opportunities are concentrated in dynamic cities and well-connected peri-urban areas, while the demographic drag in certain rural regions will likely weigh on capital appreciation potential.
“Our forecasts show average values for entire regions,” Beermann says. “In individual cases, prices can vary greatly depending on local factors such as transport links and amenities — but even in regions with stagnating or slightly falling prices, there can still be good opportunities, especially for those seeking a home rather than a pure investment.” Investors must remain alert to these local differences, which could prove pivotal in a market where regional divergences are likely to become more pronounced over the next decade.