Real Estate Prices 2026: Recovery, Stagnation or New Boom?
The bottom is reached — figures confirm a trend reversal
The German residential real estate market has passed its cyclical low point. After the historical price decline from the peak in the third quarter of 2022 — at that time, condominiums nationwide reached an average of 5,541 euros per square meter in prime locations — a structural recovery has begun.
Currently, the nationwide average price for condominiums is at 3,265 euros per square meter. Single-family homes show a year-on-year growth of +3.2 percent compared to the previous year. Both figures signal: the market is not only stabilizing — it is growing again.
BVR Forecast: +3.1 Percent for 2026
The Federal Association of German Volksbanken and Raiffeisenbanks (BVR) published in its current real estate market report a forecast of +3.1 percent price growth for the German residential real estate market for the full year 2026. This estimate applies to the overall market — in prime locations, the potential is significantly higher.
Especially noteworthy is the assessment of the Institute for Economic Research Cologne (IW Cologne), which speaks of a “sustained price upswing”. The IW emphasizes that the fundamental demand factors — urbanization, household formations, immigration — remain strongly unchanged and the supply cannot catch up in the foreseeable future.
What caused the decline from 2022–2023 — and why it won’t repeat
The price drop from the peak in 2022 to the trough in 2023 reached up to 15 percent in individual segments. The trigger was a constellation that is unlikely to repeat:
- The ECB raised the key interest rate from 0 to 4.5 percent within 14 months
- Mortgage rates rose from below 1 percent (2021) to over 4 percent (2023)
- Purchasing power adjustment: Many buyers could no longer afford the same properties
In 2026, the interest rate level is still significantly above the low point, but stable. Buyers have adapted, equity ratios have increased, and the market has priced in the new interest rate environment. A second shock of this magnitude is not expected without comparable monetary policy shocks.
76 percent of investors expect price increases in prime locations
According to the EY Real Estate Trendbarometer 2026, 76 percent of the surveyed investors expect rising prices in prime locations within the next 12 months. This expectation is self-reinforcing: those expecting rising prices buy earlier, which drives prices up.
The differentiation between Prime and Secondary locations is becoming increasingly significant. While A-locations in Munich city center, Frankfurt-Westend, or Berlin-Mitte have already recovered, B-locations in structurally weaker regions are still lagging behind. This creates selective opportunities for investors who can assess location-specific risks.
Comparison with other asset classes
A price growth of 3.1 to 3.5 percent sounds moderate. In the context of the current capital market environment, however, it is competitive:
- 10-year German government bond: approximately 2.5 percent return (nominal)
- DAX dividend yield: approximately 2.8 percent (excluding price gains)
- Real Estate: 3.1 percent value increase + 3–5 percent net rental yield (depending on location)
Residential real estate thus delivers a combined total return of 6–8 percent for well-positioned existing properties in 2026 — with simultaneously lower volatility than equity investments. Those who bought at the low point in 2023 are now sitting on book gains of 8–12 percent.
For a complete return overview and investment key figures, the Investment Overview provides all relevant tools.
Conclusion: Recovery, no boom — but structurally sound
The current market situation is not a boom, but a stable, fundamentals-driven recovery. Those waiting for a new downturn risk missing out on attractive entry opportunities — because the structural drivers (demand surplus, supply deficit, demographic demand) are stronger than short-term interest rate movements.
For a detailed analysis of the current purchase decision 2026 — including valuation methods and market regions — a structured due diligence process is recommended. The numbers currently speak in favor of selective, not broad buying.
Lukinski Rating Germany: Investment Property - City List
Rental yield explained: build wealth - definition & formula for your yield real estate.
Macro, meso, micro layer: explanation, definition & difference
Real estate location: A-, B-, C-location for house and apartment - definition, example & comparison
Buying your first property: House & apartment as an investment or owner-occupier
As Few New Dwellings as 2012: Germany's Construction Crisis at Rock Bottom
