After a 1.8 % rise in 2024, German residential property prices grew 4.0 % in 2025 according to the real‑time index compiled by the Association of German Pfandbrief Banks (VDP). The index reached 185.6 points by the end of 2025, and all four quarters of that year recorded price increases-most recently a 1.0 % rise from the third to the fourth quarter.
The upward swing was mainly driven by the residential segment rather than by commercial property prices. Compared with the fourth quarter of 2024, prices for residential buildings climbed 4.2 %, while those for office and retail premises increased 3.5 %. In the fourth quarter of 2025, both residential and commercial prices rose on a similar level, by 1.0 % and 0.9 % respectively, versus the third quarter.
The underlying data have been collected quarterly since 2010 and cover the entire German market for residential, office, and retail real estate. They are based on actual financing transaction data from more than 700 banks.
A key driver of the 4.2 % residential price increase was the continued appreciation of multi‑family houses, which registered a 5.3 % year‑on‑year rise. The price development for owner‑occupied housing-including single‑family homes and condominiums-was markedly lower, increasing only 3.0 %.
Housing supply constraints are also reflected in rising new lease rents for multi‑family dwellings in the fourth quarter of 2025: VDP reported a 3.5 % increase relative to the previous year. Because rent growth has not kept pace with the higher purchase prices, yields measured by the property‑interest‑rate index fell 1.7 % on an annual basis.
In the “Top 7” major cities-Berlin, Düsseldorf, Frankfurt, Hamburg, Cologne, Munich, and Stuttgart-price growth for residential properties in Q4 2025 was slightly above the national average. Prices in those cities rose an average of 4.7 % compared with Q4 2024. The lowest increase was recorded in Baden‑Württemberg’s capital (Würzburg) at 2.2 %, while Frankfurt recorded the highest growth at 5.7 %.
The growth of new lease rents in these seven cities mirrored the nationwide trend, averaging 3.5 % in Q4 2025; the range varied from +2.0 % in Stuttgart to +5.0 % in Frankfurt. According to the property‑interest‑rate index, yields in the metropolitan areas fell by an average of 1.4 % in the fourth quarter of 2025 compared with the same quarter the previous year.
Commercial properties financed through banks saw a 3.5 % annual price increase and a 0.9 % quarterly rise, mainly driven by office prices. Office buildings appreciated 3.9 % from Q4 2024 and 1.1 % from the preceding quarter. Retail properties grew 2.3 % annually and 0.6 % quarterly.
Regarding new lease rents, financed office buildings recorded a 3.3 % rise versus Q4 2024, outperforming retail at 1.8 %. Yield developments were broadly similar: office properties posted a 0.6 % decline, while retail properties slipped 0.5 %, according to the property‑interest‑rate index.
