According to Reuters, average house prices in Germanyare expected to increase 3.5 per cent in 2025, followed by 3.4 per cent in 2026 and 3.2 per cent in 2027.Â
This comes after a 13 per cent drop between early 2022 and 2024, which marked the biggest slump in more than a decade.
The first half of this year has already seen prices rebound by 3.3 per cent on average, exceeding the consumer inflation rate of 2.3 per cent during the same period.
Despite this recovery, current prices remain 9 per cent below their 2022 peak.
Soeren Groebel, director of research at JLL, pointed to a growing affordability gap in the German housing market.
“While we expect prices to continue rising, developments on the mortgage side are likely to move sideways or downwards only slightly,” Mr Groebel told Reuters.
“Price increases are likely to exceed the latter, thereby reducing overall affordability.”
The European Central Bank is expected to maintain current interest rates until at least the end of 2026, according to a separate Reuters poll.
The bank has already reduced its deposit rate by 200 basis points between June 2024 and June 2025.
On the supply side, permits to build apartments rose 60 per cent in September compared to the previous year, suggesting potential improvement in housing availability.
However, this may not be enough to offset affordability concerns.
A strong majority of analysts, 10 out of 12, believe affordability for first-time buyers will worsen over the coming year, continuing a troubling trend in the German housing market.
The rental market is also facing upward pressure, with average urban home rents projected to increase between 3.5 per cent and 5.0 per cent over the coming year, unchanged from previous forecasts.
“Price increases are likely to exceed the latter, thereby reducing overall affordability,” Mr Groebel said.
