The National Association of German Cooperative Banks (BVR) is one of the methodologically soundest sources for real estate market forecasts in Germany. In its current 2026 real estate market report, the BVR forecasts price growth of +3.1 percent for the German residential property market for the full year 2026.
This figure is not bold speculation — it is the result of a fundamental analysis that takes into account supply dynamics, demand trends and the financing environment. Notably, the BVR forecast was revised upward compared with its estimate for the previous year: for 2025, the forecast was still +2.3 percent.
IW Köln: “sustained price upturn” — what the term means
The Cologne Institute for Economic Research (IW Köln) uses the phrase “sustained price upturn” in its current housing market study. This choice of words is deliberate: a sustained upturn — not a speculative boom, not a short-term impulse, but a durable upward movement based on structural fundamentals.
The IW backs this assessment with three main arguments:
The supply slump of 2023–2025 will only unfold its full effect in 2026/2027
Demographic demand remains stable, with new household formation exceeding completions
Interest rates have stabilised — the buying reluctance of the adjustment phase is easing
Only 58 percent of housing demand covered: the core of the price support
Perhaps the most striking single indicator of the structural situation in the housing market: currently, only around 58 percent of annual housing demand is covered by new construction. Of the roughly 400,000 units needed, only about 215,000 to 230,000 are actually completed.
This shortfall accumulates: every year, a cumulative additional deficit of around 170,000 to 185,000 units arises. This gap adds continuously to the existing shortfall of 1.4 million homes.
For the price forecast, this is a reliable indicator: as long as demand structurally exceeds supply, there is no fundamental reason for price declines. Price growth of 3.1 percent is therefore not a trend break — it is the logical consequence of a lasting imbalance.
Property vs. the stock market: the risk-return picture for 2026
A direct return comparison between residential property and equities for 2026:
Asset class
Expected value growth
Ongoing yield
Total return
Volatility
Residential property (A location)
+3.1%
3.0–4.5% (net rent)
6–8%
low
DAX (20-year average)
variable, approx. +8–10% p.a.
~2.8% dividend
8–12%
high
10-year German government bond
0% (par at maturity)
~2.5%
2.5%
very low
Property delivers a total return competitive with the stock market at low volatility. The crucial difference: property can be leveraged. With 40 percent equity and 60 percent debt financing (at current interest rates), the resulting return on equity clearly outperforms the overall market — provided the cash flow is positive.
Which locations benefit from the forecast
The BVR figure of +3.1 percent is a nationwide average. The actual spread is considerable:
For a sound investment decision, this means: in 2026, location selection is more important than choosing an asset class. Anyone buying in A locations is investing in structurally underpinned price growth. Anyone buying in B/C locations is betting on outperformance — with correspondingly higher risk.
