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Prices in the German residential property market are showing signs of stabilization, according to the latest data from several key indices tracked at REFIRE. While the recovery remains uneven across regions and property types, trends in pricing, transaction volumes, and buyer behavior are becoming clearer.
The Europace House Price Index (EPX) recorded its tenth consecutive monthly increase in October 2024, rising 0.38% from September to reach 215.05 points, marking a 2.45% year-on-year increase. Detached and semi-detached houses drove the gains, while condominium prices showed minor declines. Europace Co-CEO Stefan Münter highlighted regional variability, noting, “In metropolitan areas, price growth is pronounced, while in other regions, prices are rising more moderately.” This data, based on actual sales prices, remains a key benchmark for understanding real market conditions.
The VdP (Verband der deutschen Pfandbriefbanken) Index similarly reported a quarterly rise of 1.1% in residential property prices during Q3 2024. Multi-family houses outperformed owner-occupied homes, with respective increases of 1.3% and 0.8%. Year-on-year changes showed multi-family homes with modest growth of 0.2% while owner-occupied properties declined by 0.6%. VdP Managing Director Jens Tolckmitt pointed to persistent challenges, commenting, “Building permits and completions are falling month after month. Without decisive action, the situation will only worsen.”
Growing price gap between older and newer properties
Data from Immowelt underscores the growing price gap between newer and older condominiums. In cities like Dresden and Leipzig, apartments built after 2010 command premiums of 45.3% and 44.4%, respectively, over those from the 1990s. In absolute terms, Dresden’s newer apartments average €1,173 more per square meter, while in Leipzig, the gap stands at €1,034. Similar trends exist in western cities like Nuremberg, where newer apartments cost 38% more, equating to €1,307 per square meter.
The GREIX index further highlights the resilience of new-build apartments, with prices now approaching their 2022 peaks in major cities. For Q3 2024, new-build condominium prices rose 1.4% quarter-on-quarter, and single-family homes increased by 1.3%. Leipzig recorded a 7% price surge in the quarter, while Hamburg saw a decline of 0.7%. GREIX data also reveals that prices overall continue to rise faster than inflation, indicating a slow but steady normalization.
Empirica’s findings echo the mixed signals across the market. The index shows that the decline in overall purchase prices has halted, with new condominium prices rising 0.5% quarter-on-quarter. Over the past decade, advertised purchase prices for new condominiums have risen by 92%, with rural districts slightly trailing independent cities. Transaction volumes, however, remain subdued, with activity at approximately 75% of the average seen between 2019 and 2021. This represents a marked drop from the highs of the last boom years but reflects the ongoing adjustment to higher financing costs and cautious buyer sentiment.
Diverging trends among the largest seven cities
The VdP and other indices provide insights into the divergent trends among Germany’s Top 7 cities. Frankfurt, Düsseldorf, and Munich posted quarterly price increases of up to 1.6%, while Hamburg and Munich experienced slight year-on-year declines. Leipzig stood out among secondary cities with significant quarterly price increases, illustrating the shifting focus toward previously undervalued markets.
While financing costs have eased since their peak earlier in 2024, they remain considerably higher than pre-2022 levels, continuing to dampen demand. According to the Remax Market Survey, financing hurdles—alongside insufficient equity—remain the most significant barriers for buyers. A substantial 83.8% of surveyed agents cited these challenges as key deterrents to purchasing.
REFIRE: The data tells a story of a market trying to find its feet after a turbulent period. Stabilization is visible in some corners, but the cracks in others are hard to ignore. For investors, the message is clear: opportunities are emerging, but they’re scattered and require a sharper eye than ever. Secondary cities like Leipzig are showing strong price growth, while new-builds are reclaiming lost ground in prime markets. Meanwhile, financing costs and cautious sentiment continue to cast a long shadow. As we move into 2025, this is not a market for the faint-hearted, but for those willing to roll up their sleeves and dig into the data, there’s value to be uncovered in the shifting terrain.
