Key facts
- German home prices increased by 1.4% year-on-year in the first quarter of 2026.
- This represents the slowest pace of price growth since late 2024.
- Buyer caution is attributed to geopolitical risks, rising unemployment, and higher mortgage rates.
- Despite affordability challenges, a significant mismatch between housing supply and demand persists.
- Home construction completions in 2024 reached their lowest point since 2015.
German home prices experienced a modest rise of 1.4% in the first quarter of 2026 compared to a year earlier, marking the sixth consecutive quarterly gain. However, this increase was the smallest since prices began to rise in late 2024, indicating a tapering momentum. The fourth quarter of 2025 saw a downward revision to a 2.6% increase.
Experts attribute buyer caution to a combination of geopolitical risks, rising unemployment, slower wage growth, and higher mortgage rates. Mortgage lending growth has also slowed significantly, with rates reaching their highest level since autumn 2024, impacting affordability. Despite these headwinds, the German housing market continues to face a structural mismatch between supply and demand, with home construction completions in 2024 at their lowest point since 2015. This underlying imbalance is expected to support continued, albeit modest, price growth.