Housing prices in Germany continue to recover after a prolonged downturn in the real estate market. In the first quarter of 2026, residential property prices increased by 1.4% compared with the same period last year. This marks the sixth consecutive quarter of growth.

📊 At the same time, the recovery remains cautious. Compared with the fourth quarter of 2025, prices rose by only 0.3%. In other words, the market has already moved out of the decline phase, but the pace of growth has slowed noticeably. For buyers and investors, this is an important signal: Germany is returning to positive dynamics, but without signs of overheating.

🏢 According to Germany’s Federal Statistical Office, the increase affected both new and existing housing. However, the dynamics differ by segment.

— the overall residential property price index increased by 1.4% year-on-year;

— compared with the previous quarter, prices rose by 0.3%;

— new housing became 2.1% more expensive year-on-year;

— existing housing increased in price by 1.2% year-on-year;

— growth continued for the sixth consecutive quarter, but its pace was the weakest since the recovery began.

📉 The slowdown is especially visible when compared with previous quarters. In the fourth quarter of 2025, prices rose by 2.6% year-on-year, in the third quarter growth stood at 3.2%, and in the second quarter of 2025 it reached 3.3%. Against this background, the 1.4% figure points not to a new boom, but to the market entering a calmer phase.

📈 The main reason is that the market recovery is still being restrained by financing costs. Mortgage loans in Germany remain significantly more expensive than during the period of near-zero interest rates. For many households, buying a home still requires a higher down payment and a more cautious calculation of monthly payments.

🔎 Buyer behaviour is also influenced by macroeconomic risks. Reuters points to several factors that are making demand more cautious: geopolitical uncertainty, rising unemployment, slower wage growth, and still-high mortgage rates. As a result, some buyers are returning to the market, but without the same level of aggressiveness seen in previous years.

🏗️ At the same time, Germany’s structural housing shortage has not disappeared. New construction remains limited due to high material costs, expensive financing, and complex approval procedures. This continues to support prices, especially in cities and areas with stable rental demand.

🏡 Current dynamics show that the market is gradually stabilising. The price decline that began after the sharp rise in interest rates no longer appears to be the dominant trend. However, the recovery remains uneven: new housing is growing faster than existing housing, while buyers continue to carefully assess borrowing costs.

— the market is moving out of the crisis phase, but is not returning to the rapid growth seen in previous years;

— new housing is receiving additional support from limited supply;

— the secondary market is recovering more slowly, as buyers negotiate more actively and assess renovation costs;

— high mortgage rates remain the main constraint on demand;

— the rental market continues to support investor interest in housing in major cities.

📍 For major cities such as Berlin, Munich, Hamburg, Frankfurt am Main, Cologne, Stuttgart, and Düsseldorf, this situation is especially important. Demand for housing remains high there, but purchase affordability has deteriorated the most. As a result, some potential buyers continue to rent, which provides additional support for rental rates.

📊 For investors, the news of a sixth consecutive quarter of growth confirms that the German real estate market has passed its bottom. At the same time, the weak pace of growth makes the market less speculative and more focused on a long-term strategy.

📈 If mortgage rates begin to fall, buyer demand may strengthen. For now, however, the market is moving cautiously: prices are rising, transactions are returning, and buyers remain sensitive to borrowing costs. This makes 2026 a transitional year between the downturn and a more sustainable recovery.

👉 If you are considering buying property in Germany, suitable listings are available on our website.