The prices of residential properties and single and double-family homes in Germany have experienced a significant increase for the first time in over two years, according to the latest Residential Index released by the Institute for Economic Research (IW) on Thursday. In the first quarter of 2025, the prices of residential properties increased by 1.1 percent compared to the same period in 2024, while single and double-family homes saw a rise of 2.9 percent. The cities with the strongest price increases were Essen (+6.3 percent) and Leipzig (+5.8 percent). Among the ten largest cities in the Federal Republic, only in Cologne were prices slightly down by 0.3 percent.
The situation on the rental market remains tense, with high demand for housing meeting limited supply in many cities. Rentals have increased nationwide by 4.3 percent compared to the same period in 2024, with renters in Leipzig paying the highest percentage increase of 7.7 percent. Berlin renters, on the other hand, experienced a relatively affordable increase of 3 percent.
“Long-term, the special reserve of Germany will make the country an even more attractive location for property investors” said study author and real estate economist Pekka Sagner. “And the coalition agreement also includes measures to reduce bureaucracy and promote new construction, which are long overdue steps in the right direction.