The German economy is treading water in 2025. Structural problems are weighing on the country. The situation on the labor market is deteriorating. At the same time, there is a shortage of hundreds of thousands of apartments, rents are rising and the number of new builds is falling. The real estate industry urgently needs positive signals from the new federal government.
According to the International Monetary Fund (IMF), US policy is having a massive impact on the global economy. The IMF anticipates a global slowdown in growth. The leading economic research institutes in Germany are also forecasting a weak economy for the current year, but expect economic output to increase in 2026. "The geopolitical tensions and the protectionist trade policy of the USA are exacerbating the already tense economic situation in Germany," says Torsten Schmidt, Head of Economic Research at the RWI Leibniz Institute for Economic Research.
Against the backdrop of global political conditions, demand for housing in Germany will remain high in the coming years. However, there are major regional differences. This is the conclusion reached by the Federal Institute for Research on Building, Urban Affairs and Spatial Development (BBSR) in its latest housing demand forecast. The forecast covers the period from 2023 to 2030 and was commissioned by the Federal Ministry of Housing, Urban Development and Building.
The BBSR sees the highest absolute demand for new construction in the large cities with strong demand and the neighboring rural districts in the surrounding area, while it is significantly lower in the peripheral regions with weaker demand.
Conclusion: As unfavorable as the general economic stagnation may be, the situation on the real estate market is currently predictable for private property buyers looking for their own apartment or house: property prices are likely to remain stable, as are interest rates on financing. The decision to buy a property instead of renting can be a smart strategy in the current economic downturn, as it enables wealth accumulation and offers long-term security against rising rents.
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