Overall, real estate prices in Germany saw an increase during the second quarter of 2026, according to the real estate price index published by the Association of German Pfandbrief Banks (VDP). This index rose by 1.3% compared to the previous year’s quarter. However, prices declined slightly by 0.1% compared to the first quarter of the current year.
The year-on-year increase in the overall index was primarily driven by residential property prices, which rose by 1.9% between April and June. Conversely, office and retail property prices recorded declines of -1.2% and -0.2%, respectively, compared to the previous year’s quarter.
Jens Tolckmitt, CEO of the VDP, noted that for the first time in eighteen months, prices across property classes behaved unevenly. While office and commercial properties suffered price drops, residential properties continued to increase, although with less dynamism than in preceding quarters. He explained that the commercial real estate market reacts more rapidly and intensely than the residential market to geopolitical developments, rising inflation expectations, and resulting interest rate changes. Furthermore, the subdued economic outlook affects commercial properties more strongly than residential properties, where persistent excess demand continues to drive up prices.
Focusing on the residential market, owner-occupied apartments saw the sharpest annual increase, rising by 2.6% between Q2 2025 and Q2 2026. The growth was slightly lower for single-family homes (2.0%) and multi-family houses (1.6%). On a quarter-over-quarter basis, prices across the board stabilized: multi-family houses rose by 0.3%, single-family homes by 0.4%, and owner-occupied apartments by 0.5%, resulting in a total residential price increase of 0.3% compared to the previous quarter.
During April to June, the situation on the German residential market remained tightly strained. The ongoing housing shortage continued to push up new contract rents in multi-family houses, although the pace of increase was slower than in previous quarters (3.2% compared to the previous year). Since rent increases outpaced price increases for these properties, the yield, measured by the VDP index for property rents, increased by 1.5%.
In the country’s top seven cities, residential property prices saw a year-on-year increase of 2.1%, slightly higher than the national average. Among urban areas, Hamburg led the way with a 3.8% increase, followed by Cologne (2.5%), Frankfurt and Düsseldorf (both 2.4%), and Munich (2.3%). Berlin and Stuttgart followed with growth rates of 1.6% and 0.7%, respectively. Overall, the price growth in the top seven cities was significantly smaller than in the first quarter, when four of these cities recorded increases exceeding 4.0% year-on-year.
Rents in the top seven cities also grew notably slower than the national average (3.2%), averaging 1.5%. Düsseldorf experienced the highest rent growth (3.6%), while Berlin recorded the lowest increase again (0.6%). When measured by the VDP property rent index, yields in these major cities fell by 0.7%.
In contrast to residential properties, office and retail property prices receded in Q2 2026 (-1.2% and -0.2%, respectively), marking the first annual decline in five quarters. The primary drivers were current market trends: office prices dropped by -1.5%, and retail properties by -0.7%. Rent growth for offices was 2.7% compared to Q2 2025, while retail property rent growth was 1.5%. Based on these price and rent movements, yields decreased significantly: by 4.0% for offices and by 1.6% for retail properties, according to the vdp-Liegenschaftszinssatzindex.
Tolckmitt concluded that the future trajectory of the commercial real estate markets depends heavily on achieving a calming of the numerous geopolitical conflicts and whether the reform agenda announced by the federal government is implemented effectively. Both developments could positively impact the economy and, consequently, the commercial real estate market if the various challenges are addressed ambitiously.
