LightFieldStudios/Envato
Frankfurt am Main
Germany’s residential property market continued its data-led recovery in late 2024, as supported by fresh data from the Federal Statistical Office. House and apartment prices rose by 0.3% in Q4 compared with the previous quarter, marking the third consecutive quarterly gain and a 1.9% increase year-on-year. The data confirm that the market has pulled out of its steepest correction in two decades, though the recovery remains uneven across geographies and asset types.
Urban markets are once again doing the heavy lifting. In Germany’s seven largest cities—Berlin, Hamburg, Munich, Cologne, Frankfurt, Stuttgart and Düsseldorf—apartment prices rose 1.6% year-on-year. Single- and two-family houses in these cities posted a quarterly gain of 3.9%, the strongest increase across any segment. However, compared with Q3, apartment prices in the Top 7 actually declined slightly by 0.3%, pointing to volatility beneath the surface.
District-free cities (Kreisfreie Städte) also saw upward momentum, with apartments rising 2.5% year-on-year and houses by 2.2%. But outside the urban core, the picture remains subdued. In sparsely populated rural areas, apartments were 1.2% cheaper than a year earlier, while detached homes declined 0.9%.
Strong signs of recovery in the 'Bankenmetropole'
The strongest sentiment shift is visible in Frankfurt, where brokers report brisk activity and rising prices in most submarkets. Von Poll Immobilien and Engel & Völkers both point to stable interest rates, a narrowing supply pipeline and buyer urgency as driving factors. Prices of up to €18,000/m2 are being asked for new builds in the Westend and Sachsenhausen, while mid-range districts such as Eschersheim and Bockenheim are seeing sustained price increases for existing stock.
"It won’t get any better than this," said Daniel Ritter of Von Poll, citing the rising cost of construction and the likelihood of only modest movements in interest rates. Apostolos Bibudis of IAD Germany confirmed that banks have "regained their courage" and that demand has picked up significantly since mid-2024.
Still, not all observers are convinced. Analysts at LBBW and IfW Kiel noted that affordability remains under pressure, particularly following a recent jump in construction financing rates. The ten-year Bund yield has risen noticeably since the federal government's €500 billion stimulus package was agreed in early March, pushing up mortgage costs. Martin Güthof LBBW warned that this could act as a brake on the nascent recovery.
The market has clearly stabilised since its 2023 trough, when average residential prices fell 8.5% – the steepest decline since the time series began in 2000. But while the statistical rebound is now visible, most experts agree the path forward will be shaped as much by monetary policy and fiscal clarity as by demographic and urbanisation trends. Expectations for 2025 price growth have already been trimmed, with several forecasts, including a Reuters analyst poll and LBBW projections, now closer to 3% rather than the 5% originally expected at the start of the year.