International

Germany: Real Estate Prices Stall While Rents Rise by 4.5%

Monday 26 October 2026 - 10:37

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The German real estate market remains under pressure in the third quarter of 2026. While home purchase prices barely change year-on-year, rents continue to rise, highlighting the contrast between access to ownership and rental options. In major metropolitan areas, residential property prices even recorded a decline.

The German real estate market struggles to regain solid momentum. According to a study by the German Economic Institute (IW) based in Cologne, housing prices showed limited growth in the third quarter of 2026, while rents increased by 4.5% year-on-year.

This development highlights two distinct trends: a purchasing market still marked by adjustments since its peak in 2022 and a rental sector where prices continue to climb. For households, this situation complicates residential choices between buying a property and searching for a rental home.

Purchase Prices Still Far from Their Peak

IW data indicates an annual increase of only 0.3% for apartments and 0.4% for single-family and multi-family homes. These limited variations reflect a still fragile recovery in the residential market.

Despite this slight progression, prices remain above or below their previous levels depending on the segments and comparison periods. On a national scale, the institute notably points out that they remain more than 10% below the peak reached in 2022.

This discrepancy reflects the sector's difficulties in returning to the valuation levels observed before the market turnaround. The low annual price evolution suggests that the recovery, if confirmed, remains gradual.

Major Metropolises More Affected by Decline

The situation appears more unfavorable in the seven largest German metropolises. Year-on-year, apartment prices there have decreased by nearly 1%, while house prices have dropped by more than 2%.

This evolution contrasts with the slight progression recorded nationally. It shows that real estate dynamics vary across regions and that major urban centers do not necessarily follow the same trajectory as the rest of the country.

These declines could weigh on the prospects for owners wishing to sell their property, although the available data alone cannot determine the precise factors behind these variations.

Rents Continue to Rise

While purchase prices stagnate, rents have increased by 4.5% year-on-year. This rise underscores the contrast between the two segments of the residential market: acquisition remains marked by low dynamic prices, while rental continues to escalate.

For tenants, this development represents additional pressure on the budget allocated to housing. For households considering buying, the comparison between renting and owning depends on several parameters, including the cost of credit, charges, income, and local prices.

The figures published by the IW thus paint a picture of a German real estate market operating at multiple speeds. The limited progression of purchase prices is not accompanied by a corresponding easing in the rental market, where rents continue to rise.