Residential property prices in Germany increased by 3.8 percent in the first quarter of 2025 compared to the same period in 2024. This marks the first rise across two consecutive quarters since 2022, suggesting an end to the previous downturn. Prices are expected to continue rising in the coming years, with predictions of 3.2 percent growth this year and 3.1 percent in 2026. The growth is fueled by housing shortages and strong demand in major cities, compounded by government initiatives to accelerate housing construction planning and approvals.
"The construction of new housing has slowed dramatically, while demand in cities like Berlin is higher than ever," observed Dr. Michael Voigtländer, real estate expert at the German Economic Institute (IW).
The upward trend in property prices is driven by persistent housing shortages, robust demand in major cities, and stabilization of mortgage rates.
Experts agree that the second consecutive quarterly increase in property prices signals an end to the downturn that began in late 2022.
The National Association of German Cooperative Banks (BVR) predicts that prices will rise by 3.2 percent this year and by 3.1 percent in 2026.
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