# Germany Property Market Outlook 2026: Is It a Good Time to Buy?

> German house prices rose 0.6% in a year, mortgage rates sit near 3.8% and completions fell to a 2012 low. The data, and what the Bundesbank says about it.

Canonical: https://www.investbud.de/en/blog/germany-real-estate-market-outlook-2025-2026
Last updated: 2026-10-26

Prices in Germany are rising again, but slowly, and financing costs more than it did a year ago. Destatis measured a 0.6% annual increase in residential property prices in the second quarter of 2026. Mortgage rates for 5 to 10 year fixations stood at 3.81% in August 2026. Whether this is the bottom is something no official source claims to know. The data below shows where prices, rates and supply stand today, so you can check whether a given flat's rent covers the cost of borrowing at those rates.

## Prices have stopped falling and are rising slowly

The Destatis house price index rose 0.6% in the second quarter of 2026 compared with a year earlier, and 0.3% compared with the first quarter ([Destatis press release No. 336, 24 September 2026](https://www.destatis.de/EN/Press/2026/09/PE26_336_61262.html)). The figures are provisional.

The large cities are lagging. In the seven biggest metropolises (Berlin, Hamburg, Munich, Cologne, Frankfurt, Stuttgart and Düsseldorf), flat prices were 0.4% lower than a year earlier and 0.5% lower than in the first quarter, while houses there were up 0.7% on the year. Outside those seven, flats in the other large independent cities rose 2.0% on the year.

## Asking prices and yields in the largest cities

Our own data shows where asking prices and asking rents stand. These are medians of publicly listed flats, recomputed daily; actual sale prices are often lower.

| City | Asking price per m² | Gross rental yield |
| --- | --- | --- |
| Munich | €9,035 | 3.4% |
| Hamburg | €6,726 | 3.4% |
| Frankfurt am Main | €6,652 | 3.8% |
| Berlin | €5,688 | 4.2% |
| Cologne | €5,347 | 3.9% |
| Düsseldorf | €5,198 | 3.9% |
| Stuttgart | €4,658 | 4.7% |
| Nuremberg | €3,846 | 4.6% |
| Dresden | €3,200 | 4.3% |
| Leipzig | €3,017 | 4.9% |

Source: [InvestBud German property market report](https://www.investbud.de/en/german-property-market), as of 26 October 2026. Gross yields are before purchase costs, running costs and financing. Higher yields exist in smaller markets; the [rental yield ranking](https://www.investbud.de/en/rental-yield-ranking) lists them city by city.

## Interest rates are higher than a year ago

The Bundesbank's interest rate statistics show the average effective rate on new housing loans to households ([Bundesbank, housing loan statistics](https://www.bundesbank.de/de/statistiken/geld-und-kapitalmaerkte/zinssaetze-und-renditen/wohnungsbaukredite-an-private-haushalte-hypothekarkredite-auf-wohngrundstuecke-615036)). For an initial fixation of 5 to 10 years:

| Month | Average effective rate |
| --- | --- |
| January 2021 | 1.03% |
| November 2023 | 3.92% |
| August 2025 | 3.56% |
| August 2026 (provisional) | 3.81% |

For fixations of more than 10 years the August 2026 rate was 4.04%. The difference to 2021 is large in euros. On a EUR 300,000 loan, interest at 3.81% costs about EUR 695 a month more than at 1.03%, before any repayment.

The rate matters most when you compare it with the yield. A flat with a 3.8% gross yield, financed at 3.8%, produces no surplus from leverage before running costs, vacancy and tax. The [mortgage calculator](https://www.investbud.de/en/calculators/mortgage) shows the monthly payment for your own loan amount and rate.

## New supply has fallen to a 2012 low

Germany completed 206,600 dwellings in 2025, 18.0% fewer than in 2024 and the lowest number since 2012 ([Destatis press release No. 174, 22 May 2026](https://www.destatis.de/DE/Presse/Pressemitteilungen/2026/05/PD26_174_31121.html)). Building permits rose 10.6% to 238,100 in the same year, and at the end of 2025 there were 760,700 approved dwellings not yet finished. More permits than completions means more construction in the pipeline, but it takes time to arrive: for residential buildings completed in 2025, Destatis measured an average of 27 months from permit to completion.

## What the Bundesbank says about the outlook

The most recent Financial Stability Review of the Deutsche Bundesbank, published on 6 November 2025, is the official outlook we rely on ([Financial Stability Review 2025](https://publikationen.bundesbank.de/publikationen-en/reports-studies/financial-stability-reviews/financial-stability-review-2025-969016?article=stability-situation-in-the-german-financial-system-969302)). Its main points on housing:

- Rising prices and transaction numbers are signs of recovery, and both have grown year on year since the end of 2024.
- Overvaluations in the German residential market unwound for the most part in 2024.
- Its price-at-risk analysis put the conditional 10th percentile of nominal house price growth for the second quarter of 2025 to the second quarter of 2026 at about 0.3%, against minus 1.4% a year earlier. In plain terms, the model saw a sizeable fall in prices over that period as unlikely. The Destatis figure for that period, plus 0.6%, came in above that line.
- About 20% of the outstanding volume of residential mortgages has to be renewed by 2027, and loan-to-value ratios in new lending have risen again with the recovery.

The review contains no price forecast, and we don't make one either. For an investor, the useful reading is that the market is no longer falling and that the official assessment no longer sees broad overvaluation. A purchase still has to work at today's rates.

## How to use this before you buy

Start with the flat you are looking at. Take the asking rent you can realistically get, the price, the purchase costs of your state and a loan rate near the Bundesbank figure, and check whether the result still works if the rate is a percentage point higher at refinancing. The [rental yield calculator](https://www.investbud.de/en/calculators/rental-yield) gives you the gross and net yield for a specific offer.

## Frequently asked questions

### Will German property prices fall again in 2027?

We don't know, and the official sources make no such forecast. The Bundesbank's November 2025 review saw a sizeable fall over the following year as unlikely, and the latest Destatis figure shows prices rising slowly. Both describe the past and the risk balance, not a price path.

### Are mortgage rates in Germany going down?

Not in 2026 so far. The Bundesbank's average rate for 5 to 10 year fixations rose from 3.58% in January 2026 to 3.81% in August 2026 (provisional).

### Where are rental yields highest?

In the largest cities, Leipzig (4.9%) and Stuttgart (4.7%) lead on gross asking-rent yields as of 26 October 2026. Among all larger markets in our data, Plauen (7.6%) and Zwickau (7.5%) are highest, at much lower prices per m².

This article is not tax, legal or investment advice.

## Related

- [German Real Estate Blog: Guides & Insights](https://www.investbud.de/en/blog)