According to forecasts by Reuters, housing prices in Germany will grow by about 3% annually until 2028, outpacing the rate of inflation. This will worsen the problem of housing affordability, especially for those who plan to purchase it for the first time, against the background of a rapid increase in rents and an acute shortage of supply.
After the strongest recession in decades, the real estate market in Europe's largest economy has recovered: prices have risen by almost 6% over the past year from the low of early 2024. According to a survey of 12 analysts, growth will be 3.3% in 2026, and 3% each in the next two years. The ECB's rate cut contributed to the recovery, but the situation remains unstable due to geopolitical risks and domestic economic uncertainty.
The main problem of the market remains the imbalance of supply and demand. Just over 200,000 new homes are planned to be built in 2025, well below the required 320,000 units per year. The housing shortage will continue to put pressure on prices, and the vacancy rate in large cities is already falling below 1%.
Rents are also showing steady growth: next year they will increase by 3-4.5%, slightly outpacing the dynamics of purchase prices. Only about half of the required housing is available for rent in megacities, and experts do not expect the situation to improve in the coming years.
Source: Global Banking and Finance
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