Where are we now?

After a ~13 % decline in average home prices between early 2022 and mid-2024, the German housing market has quietly turned a corner in 2025:

• Destatis: +3 % YoY (mid-2025)

• vdp: +3,5 % YoY (Q3 2025)

• Value AG: Existing flats +3 %, new builds just over +4 %

The correction is over. Prices are once again rising — but from a more sustainable level.

What are the best forecasts? 

All the best house pricing models predict prices based on the trend, but with some variation. And this is logical: the stock of houses does not change much from one year to another.

This trend is driven by the cost of construction and the scarcity of land--which in turn depends on population and overall economic growth. In Germany, this trend has been about 4% over the last 20 years.

It is mostly shocks in affordability that affect how house prices evolve around this trend. So low interest rates--remember they almost hit zero in 2020--pushed up prices. The jump in rates in 2022 caused a correction, and now we are back to trend.

Following German unification, massive building programs kept house prices low.

What do the forecasters say for 2026–2027?

In line with the above, the latest research points to modest, steady growth:

• Reuters (Nov 2025 analyst survey):

  • 2025: +3,5 %

  • 2026: +3,4 %

  • 2027: +3,2 %

• Trading Economics: +2–3 % per year

• LBBW: +3–4 % in 2026

These projections are broadly aligned across institutions. The consensus? No crash. No bubble. Just stable, low single-digit growth at a rate that is slightly below the trend of the last 20 years.

The supply-side constraint

While interest rates dominate headlines, supply is the real structural factor. It is simply not enough at current prices:

• Germany needs ~320,000 new housing units/year through 2030

• In 2024, only ~216,000 permits were issued — the lowest since 2010

• The Ifo Institute forecasts housing completions will decline further in 2026

This undersupply will continue to support prices, especially with urban populations continuing to grow — especially in major metros.

Base case forecast

Here’s our synthesized view on national nominal price trends:

• 2025: +3.5%

• 2026: +3.2% (range: 2–4%)

• 2027: +2.8% (range: 2–3.5%)

Even by 2027, prices will likely remain just below their 2022 peak in nominal terms — and noticeably cheaper in real (inflation-adjusted) terms.

Starting early is often the best

For most buyers, the key isn’t predicting the perfect entry point — it’s getting started and finding the right property.

• The earlier you buy, the sooner you benefit from compounding.

• A leveraged property appreciating at 3% remains financially attractive, and a key to long-term financial well-being

• Finding the right property that fits your needs and is well-priced makes the biggest difference 

• Especially in the dark days of December and January, you can find better deals

If you’re not yet ready for a primary residence, consider starting with an investment property, especially now that new-built homes have become very attractive through double depreciation:

• Low-renters: keep saving on rent while being exposed to the property market

• High earners: unlock seriously high returns due to tax rebates

Whichever path you take, the bigger risk is sitting on the sidelines waiting for perfect conditions — and missing two or more years of progress.