The real estate market is experiencing record demand for properties for sale in Germany at the start of 2025. Following the huge rise in interest rates in 2022 and the associated fall in property prices, the market fell into a state of shock, which is now slowly easing.
The stabilization of property prices in Germany observed since the end of 2024 continued at the beginning of 2025. The vdp index of the Association of German Pfandbrief Banks (vdp) exceeded the previous quarter's figure by 1.0%. Compared to the third quarter of 2023, however, prices were still down by 1.0%. The underlying figures of the vdp index cover price trends on the entire German market for residential, office and retail properties and are based on the evaluation of real estate transaction data from over 700 credit institutions.
Many property owners willing to sell held back for months as prices fell or were unable to find buyers willing to purchase under the changed financing conditions. Now the wait-and-see attitude is slowly disappearing: Some sellers can't or don't want to wait any longer and prospective buyers have now become accustomed to the higher interest rates and finally want to realize their wish to buy.
According to ImmoScout24's WohnBarometer, purchase demand in major cities and metropolitan areas is reaching new record levels, even exceeding demand during the low-interest phase at the beginning of 2021, while prices for new-build and existing apartments are stable across Germany and in major cities.
Cities are recording 14 percent more demand than at the previous peak at the end of 2020, while in the metropolitan areas it is 21 percent more than in the peak phase in mid-2021. Year-on-year, demand for condominiums in Germany is up 31 percent.
The desire for home ownership is widespread, but many people currently lack the financial means to purchase a property. As in many other European countries, politicians urgently need to create incentives, particularly for first-time buyers and owner-occupiers
Photo / Graphic: © ImmoScout24
