FRANKFURT/BERLIN (dpa-AFX) – Houses and apartments in Germany are expected to become noticeably more expensive, according to the assessment of the Volks- und Raiffeisenbanken. The banking association BVR forecasts that prices for owner-occupied residential properties will rise by 3.2 percent this year, with a further 3.1 percent increase expected in 2026.
The housing market remains tense, writes the Federal Association of German Volksbanken and Raiffeisenbanken: “Home ownership remains difficult to attain for many households.” BVR chief economist Andreas Bley adds: “The number of newly constructed homes is declining, while construction costs are rising. As a result, it is becoming increasingly difficult, especially for families, to buy their own home.”
More Than Six Years’ Income Needed for Property Purchase
In many regions of Germany, property prices have become detached from people’s financial means, according to the study. In the seven largest cities – Berlin, Hamburg, Munich, Cologne, Frankfurt/Main, Stuttgart, and Düsseldorf – property prices for owner-occupiers rose by over a third more than available incomes between 2007 and 2024. Nationwide, property prices increased by 16 percent more than disposable incomes over the same period.
Other studies have found that, on average, 6.4 years of net income are required to buy a property in Germany. In Munich, the most expensive market, it takes 14.7 years of net income, while the most affordable is the district of Hildburghausen in Thuringia, at just 1.8 years.
After years of a booming property market, house and apartment prices in Germany temporarily declined. However, since last summer, prices have been rising again, while new construction has collapsed and rents in cities are soaring.
Politics Launches New Initiatives to Tackle Housing Crisis
“To ease the housing crisis, new construction must be revived,” urges the BVR. The federal government’s “construction turbo” initiative is a step in the right direction. The government aims to accelerate sluggish residential construction in Germany through faster approvals and by waiving development plans. New special regulations in the Building Code are intended to ensure that planning, approval, and construction can proceed significantly faster in the future.
The BVR is critical of the extension of rent controls until the end of 2029: “While it may provide short-term relief to the rental market, in the long run it is likely to dampen investment and thus further restrict the supply of housing.”/ben/als/DP/zb
