Germany's housing prices rebound sharply in Q1 after 2-year slump

Germany's housing market showed strong signs of recovery in the first quarter of 2025, with residential property prices posting their steepest annual rise in over two years, according to data released Tuesday by the Federal Statistical Office (Destatis).

Between January and March, housing prices rose by 3.8 percent year-on-year, marking the second consecutive quarter of growth and the strongest increase since the second half of 2022. The rebound follows a 1.9 percent year-on-year rise in the final quarter of 2024, which ended a prolonged downturn during which prices fell for eight straight quarters.

During the slump, the housing market was hit hard by surging construction costs and interest rate hikes amid high inflation in Europe's largest economy. Several quarters saw price drops of around 10 percent.

Destatis noted that the latest price increases were observed across most parts of the country. In Germany's seven largest cities, prices rose by an average of 3.8 percent year-on-year, while smaller urban areas saw steeper gains of 6.1 percent. Only sparsely populated rural regions continued to experience modest declines in housing prices.

Germany's real estate platform Immowelt reported that the average nationwide price for owner-occupied housing reached 3,193 euros (3,770 U.S. dollars) per square meter as of Tuesday. While price growth moderated in the second quarter, major urban centers such as Berlin, Hamburg, Frankfurt, and the southern state of Bavaria remained the most expensive regions for homebuyers.