Baubranche: Immobilienpreise in Deutschland steigen immer langsamer

The German real estate market is slowing down significantly due to rising interest rates and high construction costs. Home and apartment prices only increased by an average of 0.6 percent between April and June compared to the same period last year, according to the Federal Statistical Office. This marks the fifth consecutive quarter of deceleration in price growth. The decline is the weakest since summer 2024.

Price increases were much lower at the beginning of the year, reaching 1.2 percent, compared to a doubling in February 2026. Analysts attribute the trend to higher construction costs and high material prices, which discourage potential buyers. "One of the biggest challenges currently lies in the rapidly rising construction prices," said Benedikt Horwedel, an analyst at the Landesbank Baden-Württemberg (LBBW), adding: "The scarcity of building materials due to the ongoing Hormuz Strait blockade will likely fuel this development in the coming weeks."

The European Central Bank (ECB) raised its key interest rate twice this year due to higher inflation, from 2.00 to the current 2.50 percent. This also makes real estate loans more expensive. According to financial services provider Dr. Klein, construction rates have risen by about 0.3 to 0.5 percentage points since the beginning of the Iran war. "Interest rates above four percent are likely to become a reality for now," Horwedel said. "We hardly see any signs of relaxation."

Economists forecast a two percent increase in real estate prices for 2026 and 2.5 percent for 2027. Regional differences are becoming increasingly apparent, according to LBBW analyst Horwedel. The development has varied greatly from region to region and property type over the past two quarters. In the seven largest metropolitan areas (Berlin, Hamburg, Munich, Cologne, Frankfurt, Stuttgart, and Düsseldorf), prices for owner-occupied apartments decreased slightly by 0.4 percent year-on-year, while single- and two-family houses became 0.7 percent more expensive.

In the larger cities outside of these seven metropolitan areas, prices rose more broadly: owner-occupied apartments decreased by 2.0 percent, while single- and two-family houses increased by 0.7 percent. In sparsely populated rural areas, prices decreased for both houses (-0.4 percent) and apartments (-0.6 percent), the statisticians found.