Property prices see uneven development

vdp index records rising prices for residential properties and falling prices for commercial properties in the second quarter of 2026

On the whole, property prices in Germany were again up in the second quarter of 2026. The property price index published by the Association of German Pfandbrief Banks (vdp) rose by 1.3% compared with the corresponding quarter one year before. Compared with the first quarter of this year, prices were down marginally by 0.1%.

vdpResearch has collected the data underlying the vdp index since 2010 to track price developments across the German market for residential, offices and retail properties. The index is based on an analysis of actual property transaction data from more than 700 credit institutions. This sets the vdp index apart from many other price indices. As a result of a new cooperation arrangement between vdpResearch and the Deutsche Bundesbank (German central bank), the index methodology was adjusted at the start of this year for a number of sub-indices. The new base year (index value = 100) was defined as 2022, and the historical data were adjusted to the new methodology.

The year-on-year increase in the overall index was driven by residential property prices, which advanced by 1.9% compared with the second quarter of 2025. By contrast, office and retail properties saw prices decline year on year by 1.2% and 0.2% respectively.

“As expected, the commercial property market is reacting more strongly than the residential property market to geopolitical developments, the rise in inflation expectations and interest rate developments.”
vdp Chief Executive Jens Tolckmitt

“For the first time in one and a half years, there was an uneven development in prices in the property categories. Whereas office and retail property prices contracted, residential properties continued to show a price increase – although growth was slower than in the preceding quarters,” vdp Chief Executive Jens Tolckmitt commented. He went on to say that, as expected, the commercial property market is reacting more strongly and directly than the residential property market to geopolitical developments, the ensuing rise in inflation expectations and the resulting interest rate developments. Nor is it surprising, Tolckmitt added, that the modest economic growth is having a stronger impact on commercial properties than on residential properties, where the ongoing excess demand continues to push prices up.

Residential properties: housing shortage continues to drive rents higher

Among residential properties, which showed a 1.9% increase in prices overall year on year, condominiums saw the strongest price growth between the second quarter of 2025 and the second quarter of 2026, rising by 2.6%. The increase in prices for single-family houses (2.0%) and multi-family houses (1.6%) was somewhat less pronounced. Compared with the first quarter of 2026, price growth rates were recorded of 0.3% for multi-family houses, 0.4% for single-family houses and 0.5% for condominiums, meaning that price increases remained at similar levels in the second quarter. Thus, the overall price increase for residential properties came to 0.3% quarter on quarter.

The situation on the German residential property market remained tense between April and June of this year. The ongoing housing shortage also continued to push up rents under new leases in multi-family houses. That said, the increase in rents came to 3.2% compared with the corresponding quarter one year earlier, which was less than in previous quarters. Since rents under new leases rose more strongly than multi-family house prices, returns as measured by the vdp index for cap rates went up by 1.5%.

“We support the measures the federal government has initiated. It is important that these are now implemented promptly and start to take effect.”
vdp Chief Executive Jens Tolckmitt

Tolckmitt took a positive view of the federal government’s recent announcement of an update to the German Building Code and of further housing-policy and regulatory initiatives: “It sends precisely the right signal to all market players that planning procedures are to be drastically speeded up and that exaggerated technical requirements can be deviated from.” He went on to say that the recent announcement that the sectoral systemic risk buffer for residential property loans, which places a burden on financing, will be abolished is long overdue. Even when it entered into effect in 2022, there was no objective justification for this measure, he said.

Tolckmitt also welcomed the proposal for federal legislation that is intended to prevent the socialization of large private rental housing portfolios at the state level – a topic that is currently the subject of intense debate in Berlin. “Debates on measures that call ownership into question cause considerable damage to the property market and to Germany as a business location – as we are already seeing – because they drive away private capital that is urgently needed for new housing construction.” Over and above that, the government funds that would be needed for socialization could be put to better use in creating new, additional housing in order to reduce the shortage. Tolckmitt emphasized the vdp’s support for all the measures the federal government has initiated to create new living space. Moreover, he stressed how important it is that these measures are now promptly implemented and start to take effect so that the housing market is actually stimulated in the medium term.

Housing in the top 7 markets*: German capital again records lowest growth in rents

Germany’s top 7 cities recorded a somewhat stronger increase in residential property prices (+2.1%) year on year than in Germany as a whole. Of the seven metropolitan areas, residential property prices climbed most steeply in Hamburg (+3.8%),ahead of Cologne (+2.5%), Frankfurt and Düsseldorf (+2.4% in each case) and Munich (+2.3%). These were followed by Berlin and Stuttgart with growth rates of 1.6% and 0.7% respectively. The overall price increase in the top 7 cities was considerably lower than in the first quarter, when four of the top 7 cities experienced price increases of more than 4.0% year on year.

Averaging 1.5%, the increase in rents under new leases in the top 7 cities was appreciably lower than in Germany as a whole (3.2%). The highest growth in rents was recorded in Düsseldorf (+3.6%), while Berlin again saw the lowest growth rate (+0.6%). Measured by the vdp cap rate index, returns in the metropolitan areas contracted by 0.7%.

Office and retail properties: prices decline

Unlike residential property prices, prices for offices and retail properties were down in the second quarter of 2026 (-1.2% and -0.2% respectively). This was the first year-on-year decline in five quarters. The drivers here were current developments. Office prices decreased by 1.5%, retail properties by 0.7%.

Whereas rents for offices grew by 2.7% compared with the second quarter of 2025, retail property rents were up by 1.5%. Based on growth in prices and rents, returns as measured by the vdp cap rate index increased by 4.0% for offices and 1.6% for retail properties.

“An ambitious implementation of the reform agenda and the resolution of geopolitical conflicts could have positive implications for the economy and, therefore, the commercial property market.”
vdp Chief Executive Jens Tolckmitt

“How the commercial property markets will develop going forward depends, amongst other things, on whether or when the various geopolitical conflicts are resolved and the reform agenda announced by the federal government is implemented and takes effect,” Tolckmitt remarked. He pointed out that both could have positive implications for the economy and, therefore, the commercial property market if the numerous challenges are tackled ambitiously.

Interactive charts and the raw data for the individual vdp property price indices are available at https://www.vdpresearch.de/preisindizes/ .

*  The rates of change given here in the section “Housing in the top 7 markets” are still based on the previous vdp index methodology. They differ temporarily from the figures shown in the top 7 index of the Deutsche Bundesbank. Uniform top 7 figues will be reported as of the first index publication in 2027 at the latest.