"Finally, Home Values Skyrocket" 📈 German Property Market Wakes Up After Three Lethargic Years
Skyrocketing real estate costs mirror trends not seen since the year 2022, resulting in steep price hikes.
Germany's housing and apartment prices are on the rise again, returning to growth levels not seen in nearly three years, according to a recent study. This revival has mainly impacted metropolitan areas, with some exceptions in cities like Dresden.
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The housing market has shown the largest price increase since mid-2022, excitedly announced IfW real estate market expert Jonas Zdrzalek. This resurgence seems to suggest that buyers have accepted the new market conditions and are banking on the real estate market having reached its lowest point for now.
Despite economic uncertainties, such as those surrounding high United States tariffs, the number of real estate transactions jumped by almost a third in comparison to the same period last year.
Booming Metropolises
The housing markets in nearly every major city have experienced marked growth. Specifically, apartment prices in Cologne soared by 3.4%, followed by Stuttgart (2.1%), Berlin (1.7%), Düsseldorf (1.3%), Frankfurt (0.7%), and Leipzig (0.6%). Detailed data for Hamburg and Munich was not yet available at the time of the study.
Back to Historical Highs?
Apartment prices have nearly returned to their absolute highs, according to the IfW. The rate of future price increases hinges on economic and monetary policy conditions. For buyers eager to enter the market, the current situation could present an opportune moment.
It's important to note that, despite recent gains, apartment prices remain about 10% below their peak, providing room for further growth in certain markets.
City-specific Insights
Berlin
Berlin's housing market has shown an upward trend again, with a 2.2% year-on-year increase in existing property prices. With a typical 70 sqm apartment now costing around €373,000, a positive growth trajectory has emerged after flat prices for three years. However, the new-build housing sector in Berlin continues to face struggles such as high construction costs and lower demand, causing a continuation of stagnation in this market segment[4].
Munich
Although current price changes were unavailable, Munich continues to be Germany's priciest market, with an average of €8,028 per sqm[5].
Other Cities
Cities like Karlsruhe and Duisburg also experienced dynamic price increases, with jumps of 3.8% and 3.2%, respectively. Dresden, while experiencing a slight price decline of 0.9%, had seen sharp increases in previous quarters[1].
Market Context
Following several years of relatively static growth, the German real estate price index sat at 185 in Q4 2024, essentially unchanged from the prior year. This plateau suggests the market had been in a holding pattern before the recent uptick[2]. Nevertheless, the market situation in early 2025 may well be regarded as a promising stepping stone for buyers, as prices are rebounding but haven't yet reached the record heights of previous times[1].
- IfW real estate market expert Jonas Zdrzalek announced that the housing market has shown the largest price increase since mid-2022, signaling a revival in Germany's community policy and housing market.
- Vocational training in the real estate sector may be beneficial for investors, considering the average increase in apartment prices across major cities and the current upward trends in the housing-market.
3.Whatsapp groups dedicated to real-estate finance discussions can serve as valuable resources for those interested in investing in the booming German housing market.
- The average apartment price in Berlin is now €373,000, making it a potential area for investement in the city's real-estate, although the new-build housing sector continues to struggle.
- Munich remains the priciest market in Germany, with an average of €8,028 per sqm, providing an insight into the high-end housing-market investments.
