Condominium prices in Germany were 0.2 per cent lower in the third quarter than a year earlier, the first annual fall since the second quarter of 2024, according to the Kiel Institute’s GREIX index, published on Thursday. The index is built on notarised sales. Jonas Zdrzalek, the institute’s real estate expert, said the rise in flat prices had “practically come to a standstill”.
It is not a crash. Against the previous quarter, flat prices rose 0.5 per cent, the institute said. But in real terms the picture is weaker: flats were down about 3 per cent on the year and single-family homes about 2 per cent. In nominal terms houses cost 0.9 per cent more than a year ago, though 0.5 per cent less than in the previous quarter.
One market, two speeds
Regional gaps are wide. In Cologne flat prices rose 4.6 per cent over twelve months; in Frankfurt they gained 2.4 per cent in the quarter. Berlin posted a third quarterly decline in a row and is 2.9 per cent below last year. Stuttgart remains almost 22 per cent below its earlier peak, Reuters reports, while Leipzig is 3.6 per cent above its own.
Zdrzalek sees no broad recovery. Listings data point to a weaker market: properties stay on offer longer and asking prices are cut more often. Expensive locations react more strongly to higher financing costs because yields there were already thin before rates turned. Turnover is small: in the second quarter, Reuters says, 1.7 per cent fewer flats and 8.2 per cent fewer houses were sold than a year before.
Official data point the same way. The Federal Statistical Office (Destatis) reported residential property prices up just 0.6 per cent year on year in the second quarter. In the seven biggest cities flats were already 0.4 per cent cheaper; in thinly populated districts, 0.6 per cent.
Room for buyers, none for tenants
For would-be buyers the turn mainly means more room to negotiate, not automatically lower repayments. Mortgage rates this summer were around 4 per cent for a ten-year fix, according to FMH-Finanzberatung, so current bank offers are worth collecting. Buyers with equity and no deadline have a better chance of pushing prices down in regions where properties take longer to sell.
Tenants feel no relief. Asking rents rose 3.7 per cent in the third quarter, the GREIX rent index shows, with Munich up 4.8 per cent to an average €23.70 per square metre before service charges and Hamburg up 6.7 per cent. The logic is simple: those who cannot or will not buy stay in the rental market and add to demand there.
Our assessment: a repeat of the 2022-23 slide is not in sight; a longer sideways phase with widening gaps between cities looks likelier. Much depends on interest rates, and a renewed rise in bond yields would add pressure on prices. This is the editors’ view, not an institute forecast.
Sources: Tagesspiegel/Reuters, Handelsblatt, Destatis, Kiel Institut (GREIX)
