According to the most important real estate financiers, buyers of apartments and houses will have to pay more again. In the third quarter, prices rose slightly on average by 1.1 percent compared to the previous quarter, according to the Association of German Pfandbrief Banks (VDP).

This means that residential real estate has become more expensive compared to the previous quarter for the second quarter in a row – a sign that the real estate crisis is ending after historic price slumps last year. However, prices were still a minimal 0.2 percent below the level of the third quarter of 2023, according to the association, which represents large real estate financiers, including Deutsche Bank, Commerzbank, important savings banks, state banks and special financiers.

Of the seven largest cities, prices rose the most in Frankfurt in the third quarter (plus 1.6 percent compared to the previous quarter) – ahead of Munich and Düsseldorf (1.5 percent each). The increase was lowest in Stuttgart and Berlin (0.8 percent).

Rents are rising significantly

According to the VDP data, tenants also have to dig deeper into their pockets. New contract rents in apartment buildings rose by 0.7 percent quarterly and by 5.6 percent year-on-year. In the metropolises, rents rose most sharply in Berlin and Frankfurt, with increases of 5.4 and 4.7 percent respectively within a year.

Less building permits are being reported month after month and building completions remain at far too low a level, said VDP general manager Jens Tolckmitt. “The situation on the housing market continues to deteriorate.” After the end of the traffic light coalition, he appealed: “There is an urgent need for decisive measures that will quickly and noticeably stimulate housing construction. These decisions cannot be postponed any further.”

Price increase after a significant drop

Last year, real estate prices in Germany fell by 8.4 percent – according to the Federal Statistical Office, the strongest annual decline since the start of the series in 2000. The main reason was sharply increased interest rates, which made loans more expensive. Recently, building interest rates have fallen again, and in the second quarter prices for apartments and houses rose for the first time in two years. Banks are also granting significantly more real estate loans again.

It is still too early to speak of a sustained price increase in the real estate market, said Tolckmitt. Setbacks cannot be ruled out, he said, with a view to the weak economy and global crises.

The VDP data is based on transactions from more than 700 banks and is therefore more reliable than analyzes based on offer prices. Because when buying real estate there are usually negotiations.

The association’s assessment corresponds to the latest data from the Kiel Institute for the World Economy. Accordingly, condominiums rose in price in the third quarter by 1.4 percent compared to the previous quarter and single-family homes by 1.3 percent.