The Association of German Pfandbrief Banks (vdp) observed a differentiated price development in the German real estate market for the second quarter of 2026. According to the vdp real estate price index, prices rose by 1.3% compared to the same quarter of the previous year. Compared to the first quarter of the same year, a marginal decrease of 0.1% was recorded. Data relevant for the index has been collected by vdpResearch since 2010 and includes price dynamics in the residential, office, and retail property segments. This is based on the evaluation of transaction data from over 700 credit institutions, which underlines the validity of the vdp index.
An adjustment to the index methodology for some sub-indices was made at the beginning of this year, resulting from a cooperation between vdpResearch and the Deutsche Bundesbank. The year 2022 was defined as the new base year (index value = 100), and historical data were revised according to the new methodology. The observed year-on-year increase in the overall index is primarily attributable to the development of residential property prices, which rose by 1.9% compared to the second quarter of 2025. In contrast, office property prices fell by 1.2% and retail property prices by 0.2% during the same period.
Jens Tolckmitt, Chief Executive of the vdp, commented on this development by stating that prices in the asset classes moved inconsistently for the first time in eighteen months. While office and retail properties experienced price declines, residential properties continued to show price increases, albeit with less momentum than in previous quarters. He explained that the commercial real estate market reacted, as expected, more strongly and immediately to geopolitical developments, increased inflation expectations, and the resulting interest rate trends. Similarly, the subdued economic development had a greater impact on commercial properties, while in residential properties, the persistent excess demand led to price increases.
Within the residential property segment, which recorded an annual price increase of 1.9%, condominiums showed the highest price growth at 2.6% between the second quarter of 2025 and the second quarter of 2026. Detached houses recorded growth of 2.0%, and multi-family homes of 1.6%. Compared to the first quarter of 2026, the prices of multi-family homes rose by 0.3%, detached houses by 0.4%, and condominiums by 0.5%, resulting in an overall price increase for residential properties of 0.3% quarter-on-quarter.
The strained situation on the German housing market continued from April to June this year. The shortage of housing led to a further increase in new rental contracts for multi-family homes by 3.2% compared to the same quarter of the previous year, albeit with a smaller increase than in previous quarters. The yield on multi-family homes, measured by the vdp index for property interest rates, increased by 1.5%, as new rental contracts rose more sharply than purchase prices.
Mr Tolckmitt positively assessed the federal government's announced housing policy plans, including an upgrade to the Building Code and the acceleration of planning procedures. He emphasised the necessity of moving away from excessive technical requirements to stimulate the market. The also announced abolition of the sectoral systemic risk buffer for residential property financing was described as overdue, as a factual justification for its introduction in 2022 had not been given. Furthermore, the vdp welcomed efforts to create a federal statutory regulation that would end debates at the state level concerning the socialisation of private rental housing stocks. Such debates significantly harm the real estate market and Germany as a business location by driving away private capital needed for new construction. State funds for socialisation could be used more effectively for creating new housing. The vdp reaffirmed its support for government initiatives to create housing and called for swift and effective implementation of these measures to revitalise the housing market.
In the Top 7 cities, residential property prices rose by 2.1% year-on-year, thus slightly more than the national average. Hamburg recorded the highest price increases for residential properties at 3.8%, followed by Cologne (2.5%), Frankfurt and Düsseldorf (each 2.4%), and Munich (2.3%). Berlin and Stuttgart showed smaller increases with growth rates of 1.6% and 0.7% respectively. Overall, the price increase in these metropolises was significantly more moderate than in the first quarter, when four of the Top 7 cities still recorded price increases of over 4.0%. New rental contracts in the Top 7 cities increased by an average of 1.5%, which is significantly below the nationwide figure of 3.2%. Düsseldorf showed the highest rental growth at 3.6%, while Berlin had the smallest increase at 0.6%. Yields in the metropolitan areas decreased, measured by the vdp property interest rate index, by 0.7%.
