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Germany’s housing market has not exactly roared back to life, but Q1 2025 has brought the clearest sign yet that the two-year correction is over. Prices for owner-occupied apartments, houses and multi-family properties have risen across nearly all residential indices, with the sharpest gains seen in the country’s major cities. Rents continue their upward march, leaving little doubt that pressure in the housing system remains acute.
The GREIX index, based on over two million notarised transaction data points, recorded year-on-year price increases of 3.2% for condominiums, 4.7% for single-family homes, and 8.7% for multi-family properties. Quarter-on-quarter, price growth was more modest, with owner-occupied apartments up 1.0%, houses flat (+0.1%), and multi-family homes up 1.1% – though GREIX cautioned that low transaction volumes still limit the reliability of some sub-segments. "The wait is over," said Jonas Zdrzalek of the Kiel Institute for the World Economy, which is a partner in producing the index. "After two years of price recalibration and interest rate adjustment, the market is picking up again."
The Cologne Institute for Economic Research (IW) confirmed a similar trend. Prices for owner-occupied apartments rose by 1.1% year-on-year and 1.2% quarter-on-quarter in Q1, while single-family and two-family houses increased by 2.9% year-on-year and 2.3% quarter-on-quarter. "This development points to a certain stabilisation of the market," said IW economists Pekka Sagner and Michael Voigtländer. Slightly lower financing costs and persistent demand, especially in the existing stock, have supported the turnaround, they argued. Europace’s EPX index showed an even stronger bounce: year-on-year, owner-occupied flats rose 5.8%, with existing homes up 2.79%.
Regionally, the sharpest gains were recorded in Leipzig and Essen, where purchase prices rose by 5.8% and 6.3% respectively. Cologne was an outlier, with a slight decline of 0.3%. GREIX data shows that prices rose in nearly all major cities compared to the previous quarter, with Cologne (+3.4%), Stuttgart (+2.1%) and Berlin (+1.7%) leading the pack. Frankfurt, Düsseldorf and Leipzig also posted gains, though more moderate. The strongest recoveries from post-2022 lows were in Leipzig (+9%) and Cologne (+8%), with prices for condominiums now on average only 10% below their peak levels nationally.
Inner-city premiums shrinking
Notably, price premiums for central locations have begun to shrink. GREIX reports that buyers are less willing to pay high mark-ups for city-centre properties. In Hamburg and Düsseldorf, inner-city apartment prices have fallen by over 17% since 2022, outpacing price declines in suburban areas. "Buyers have become more hesitant about the premium for prime locations," said Zdrzalek. In parallel, suburban districts such as Düsseldorf Bilk (+11.6%), Frankfurt Mitte-Nord (+8.9%) and Hamburg Harburg (+7.6%) saw some of the strongest annual gains in 2024, according to GREIX.
While for-sale prices are rebounding, rents remain under persistent upward pressure. IW reports a nationwide rent increase of 4.3% year-on-year in Q1 2025, after rises of 4.7% and 5.3% in the previous two quarters. Leipzig led the field with a 7.7% jump in new contract rents, followed by Essen and Frankfurt (both +6.1%) and Düsseldorf (+5.8%). Berlin, Cologne and Dortmund saw below-average rental growth, between 3.0% and 3.7%. "The ongoing shortage of available housing is meeting robust demand, especially in conurbations and economically attractive regions," said IW.
According to Value AG, all residential market segments saw price increases in Q1 2025 for the first time since mid-2022. Prices for second-hand flats rose by 0.7% in March alone, while houses gained 0.5%. "The markets turned towards growth in the first quarter," said Value AG director Sebastian Hein. "Even though interest rates have risen, the pressure in the housing market is too high to stifle momentum."
Some caution remains warranted. The GREIX index is based only on closed deals, which tend to reflect stronger properties and more flexible sellers. As Werner Rohmert points out in his publication Der Immobilienbrief, many properties remain unsellable at anything close to 2021 valuations, especially those with sub-par energy ratings or dysfunctional layouts. "The diversity of properties currently unsellable or only sellable at dramatic discounts is not taken into account. In this respect, the index may mislead about the real market situation," the newsletter warned.
Still, transaction volumes are rising. GREIX notes that deal activity in Q1 was up by nearly a third compared to the same period last year. And while the price recovery remains uneven, momentum is clearly building in both urban and suburban markets. Whether that proves sustainable in the face of continued economic uncertainty, a sluggish construction pipeline and potential cost pressures from abroad remains the central question for the second half of the year.