German home prices increased by over 5%
Germany’s housing market is heating up once more, with home prices in major cities climbing by an average of 4.6%, according to new data from the Association of German Pfandbrief Banks (vdp), which represents the country’s key mortgage lenders.
Cities such as Munich, Düsseldorf, Hamburg, and Cologne recorded price increases of over 5%, signaling renewed momentum in urban real estate markets.
Rents Climb Alongside Property Prices
Tenants are also feeling the pinch, as rents for new leases rose 3.7% nationwide and 3.8% in large cities. The sharpest rent hikes were reported in Düsseldorf and Frankfurt, where rates surged by around 5%.
Housing Shortage Expected to Persist
Despite government initiatives to accelerate the approval process for new building permits, experts warn that Germany’s housing shortage—particularly in major cities—will continue for several years.
“The initiative to speed up housing construction is good and welcome, but more will be needed,” said Jens Tolckmitt, CEO of the vdp. He emphasized that success will depend largely on local authorities taking advantage of the new opportunities.
Among the proposals to stimulate construction are 80% state guarantees for real estate loans, aimed at boosting large-scale housing projects.
The vdp has published real estate data since 2010, based on transactions from over 700 banks.
After years of soaring prices, property values dipped following the 2022 peak, when rising interest rates drove up borrowing costs. The latest figures suggest a potential rebound in 2025.
