Register - if you don't have an account

Yes! Sign me up for Global Property Guide's fortnightly email newsletter.

Login - for registered users

Forgot Password?
Explore destinations
continent map couldn't be loaded Pacific Europe & Russia North America Latin America Asia Africa Middle East Caribbean


Financial Overview


Property Search

Global Statistics

Regional Statistics

Last Updated: Nov 13, 2016

Germany's housing market price rises have been accelerating for several months.  In a country where the housing market has historically been extraordinarily stable, this is a significant shift. The reasons?  Strong economic growth, 1.1 million refugees, high work-related immigration, weak construction supply and low interest rates.

The German hedonic price index rose by 8% (7.6% inflation-adjusted) during the year to August 2016 (hedonic indices attempt to compare like-for-like exactly, so are the best measure of house price trends).  This is up from a 5.8% rise (5.6% inflation-adjusted) during the same period the previous year, based on Europace figures.

Apartment prices rose 9.6% y-o-y (9.2% inflation-adjusted), compared to the 5.4% y-o-y (5.2% inflation-adjusted) growth during the same period last year. 

New home prices rose somewhat more than existing homes.

The German housing market was one of the few that avoided a slump in the wake of the 2008-2009 global financial crisis.

German house price changes:
  • In 2009, the price index fell by 1.9% y-o-y (-2.7% inflation-adjusted).
  • In 2010, prices bounced back, rising by 3.6% y-o-y (2.2% inflation-adjusted).
  • In 2011, house prices rose by 4.7% y-o-y (2.7% inflation-adjusted).
  • In 2012, house prices rose by 4.6% y-o-y (2.5% inflation-adjusted).
  • In 2013, house prices rose by 3.2% y-o-y (1.8% inflation-adjusted).
  • In 2014, house prices rose by 3.7% y-o-y (3.5% inflation-adjusted).
  • In 2015, house prices rose by 5.6% y-o-y (5.3% inflation-adjusted).

Extremely low interest rates and bond yields have encouraged persistently growing demand, despite the fact that most German mortgage borrowers borrow on long-term interest rates, which are higher than "tracker" rates.

The quantitative easing programme pursued by the European Central Bank, worth about US$65 billion per month, is fuelling fears of housing price bubbles in several eurozone countries – with Germany and Norway most at risk, according to a report by Moody’s Analytics, which also points to high risks in the U.K. (which does not use the euro). The QE programme lowers bank interest rates to zero, encouraging demand for homes. German homes could be overvalued by as much as 10%, warned the Bundesbank in late 2013.

Recently, the migration crisis and strong economic growth have added to the pressure.

Concern about house prices is mounting. The authorities have also considered capping the amount home-buyers can borrow.  In March 2016, the German government implemented the Mortgage Credit Directive (MCD), which requires banks to apply stringent rules to borrowers intending to acquire residential properties in Germany. Aside from the property's value, this new legislation requires banks to examine borrowers' creditworthiness, making it more difficult for borrowers to obtain mortgage loans.

During the year to Q2 2016:

In North-East Germany:
  • In Berlin apartment prices rose by 7.7% to a median price of €3,036 (US$ 3,301) per square metre (sq. m.). The median price of one- and two-family houses rose by 4.6% y-o-y to €2,104 (US$ 2,287) per sq. m.
  • Hanover had the strongest y-o-y apartment price hike in Q2 2016, rising by 10.02% to €2,172 (US$ 2,361) per sq. m. However, one- and two-family houses increased by only 1.33% to €1,719 (US$ 1,869) per sq. m.
  • In Dresden, median apartment prices rose by 1.79% to €1,987 (US$ 2,160) per sq. m., while one- and two-family houses increased by 6.35% to €1,995 (US$ 2,169) per sq. m.
  • In Hamburg, median apartment prices increased by only 1.41% to €3,480 (US$ 3,783) per sq. m. One- and two-family houses rose by 2.57% to €2,325 (US$ 2,528) per sq. m..

In West Germany:
  • Dusseldorf had the highest apartment price increase in the region, rising by 7.62% to a median price of €2,261 (US$ 2,458) per sq. m. In contrast, the median price of one- and two-family houses fell by 1.57% to €2,163 (US$ 2,352) per sq. m..
  • In Cologne, median apartment prices rose by 5.79% to €2,474 (US$ 2,690) per sq. m. One- and two-family houses had a price increase of 1.92% y-o-y to €2,099 (US$ 2,282) per sq. m.
  • In Dortmund, median apartment prise fell by 3.05% to €1,300 (US$ 1,413) per sq. m. Prices of one- and two-family houses also fell by 1.06% to €1,872 (US$ 2,035) per sq. m.

Germany house pricesIn South Germany:
  • Frankfurt had the weakest y-o-y apartment price hike in South Germany, increasing by 3.29% to €2,600 (US$ 2,827) per sq. m. The same is true for its one- and two-family houses, which rose by only 1.44% to €2,219 (US$ 2,413) per sq. m.
  • Apartments in Munich enjoy the highest y-o-y price hike in the region, increasing by 10.52% to €4,821 (US$ 5,241) per sq. m. One- and two-family houses had a price increase of 5.75% to €3,627 (US$ 3,943) per sq. m.
  • In Stuttgart, apartment prices rose by 9.07% to a median price of €2,519 (US$ 2,739) per sq. m., while the median price of one- and two-family houses rose by 8.29% to €2,525 (US$ 2,745) per sq. m.

All figures from Dr. Klein’s trend indicator of property prices (DTI).

Analysis of Germany Residential Property Market »

Last Updated: Sep 16, 2017

Prices of houses and apartments in Germany are rising.  Berlin is still much more affordable than Munich, but Germany's capital city is now more expensive than its financial centre, Frankfurt.
  • Munich is Germany’s high-cost leader. To buy a 120 square metre (sq. m.) apartment in Munich costs around 940,000 euros
  • in Berlin a 120 sq. m. apartment costs around 600,000 euros
  • in Frankfurt, a 120 sq. m. apartment costs around 550,000 euros.

The purchase price of apartments in Munich's prime residential districts is around 7,800 euros per sq. m., while in Berlin apartments cost around 4,900 euros per sq. m., and in Frankfurt around 4,500 euros per sq. m..

How much will you earn? Over the last two years, Frankfurt has moved into the lead in terms of rental return-on-investment.  Yields both in Munich and Berlin are a little lower than in Frankfurt.
  • In Munich a 120 sq. m. apartment can rent for around 2,250 euros a month, earning a yield of 2.9%.
  • in Berlin a 120 sq. m. apartment can rent for around 1,500 euros a month, earning a yield of 3.0%
  • in Frankfurt, a 120 sq. m. apartment can rent for around 1,700 euros a month, earning a yield of 3.7%.

These are not high yields.  All apartments included in the survey are located in the upscale residential neighbourhoods of Berlin, Frankfurt and Munich, and somewhat higher yields can be had on smaller apartments in poorer neighbourhoods.

Wherever you buy, you are unlikely to have much problem letting your apartment. Especially at the lower end there is an acute shortage of affordable apartments as the German boom continues, sucking in workers from all over Europe.

Round trip transaction costs are moderate to high in Germany. See our Germany transaction costs analysis and our Residential property transaction costs in Romania compared to other countries.

Read Rental Yields  »

Last Updated: May 18, 2017

Rental Income: Rental income is taxed at progressive rates, up to 45%.

Capital Gains: Properties held for more than ten years are not liable to tax on capital gains.

Inheritance: Inheritances are taxed at progressive rates, depending upon the relationship to the deceased, and the value of the inheritance. Spouses and children are taxed at progressive rates, from 7% to 30%.

Residents: The same tax system applies to residents and nonresidents except for various tax allowances and filing options e.g. joint returns.

Read Taxes and Costs  »

Last Updated: May 19, 2017

Roundtrip transaction costs are low to moderate at around 9.02% to 16.34% of the total price. Real estate transfer tax is levied at 3.5% to 6.5%, depending on the federal state where the property is located. Real estate agent’s fee is negotiable from 3% to 6%, plus 19% VAT.

Read Buying Guide  »

Last Updated: May 25, 2006

German law leans signifcantly toward the tenant.

Germany propertiesRents: While rents can be freely agreed, “exorbitant” rents can subsequently be appealed.

Rent increases are controlled, and cannot exceed more than 20% in nominal terms (less in real terms) over three years.

Tenant Security: Unlimited contracts are standard, effectively giving the tenant security of tenure. The tenant can object to the “ordinary notice”, and demand continuation, if termination of the lease would give rise to hardship for himself or his family that would be unjustified, even in the light of the landlord’s legitimate interests.

Read Landlord and Tenant  »

Last Updated: Nov 13, 2016

German economy to expand in 2016

Germany GDP inflationThe German economy expanded strongly during the year to Q2 2016, with a 3.1% y-o-y growth, the biggest GDP rise over the last five years, and a strong follow-up from a 1.5% y-o-y growth in the first quarter, according to the Destatis. On a quarterly basis, however, the economy slowed to 0.4% q-o-q in Q2 2016, from a 0.7% growth in Q1 2016. Germany's economy expanded in 2015, growing by 1.7%, a slight increase from 1.6% GDP growth in 2014, based on the figures from the German Federal Statistical Office (Destatis).  While trade has driven economic growth in the recent quarter, the decline of fixed investment, on the other hand, contributed to its slowdown.

The economy is expected to expand by 1.7% in 2016, 1.4% in 2017, and 1.8% in 2018, according to the Deutsche Bundesbank.

"Looking ahead, private consumption should remain an important growth driver on the back of low inflation, low interest rates, low unemployment and higher wages," says ING's Chief Economist Carsten Brzeski. "In addition, at least in the short run, the refugee crisis will continue to support domestic demand (as already illustrated by strong public consumption numbers over the five quarters) and the construction sector should rebound quickly after the technical correction on the second quarter. The economy’s Achilles’ heel, however, remains the lack of new investment. To kick-start investment in an ageing economy, some government support is needed."

Following the sharp slowdown in 2012, Germany’s economy slowed further in 2013, growing by only 0.6%, according to the IMF. The economy bounced back in 2014 with 1.6% growth and has since then registered robust GDP growth.

Germany’s unemployment rate was 4.2% in August 2016. In contrast, the entire euro area’s unemployment rate was around 10.1%.

In September 2016, Germany's annual inflation rate was 0.7% according to the Destatis. In June 2016, the Bundesbank slashed its inflation forecast for 2016 from 1.1% to 0.2%. The central bank also expects inflation to rise to 1.5% in 2017 and 1.7% in 2018.

Recently, investors' confidence in the country plummeted because Germany's largest bank, Deutsche Bank, faces turmoil that could jeopardize its financial health. In September 2016, the bank's shares suffered huge declines on news of the US$ 14 billion fine sought by the US Department of Justice, for the bank's sale of fraudulent mortgage-backed securities before the 2008 financial crisis.

Aside from the multi-billion dollar fine, there was a US$ 7 billion quarterly loss last year, a US$258 million fine for its violation of US sanction laws in November 2015, and a "stress test" failure last June. Investors are questioning the bank's solvency, and at the end of September 2016 the German government stated that it would not bail out Deutsche Bank.

  • Low to moderate transaction costs
  • Largest economy in Europe
  • High yields in Berlin
  • Pro-tenant rental market
  • Moderate rental income tax
Price (sq.m): €4,326 For a 120 sq. m. property, usually an apartment.
Rental Yield: 3.99% For a 120 sq. m. property, usually an apartment.
Rent/month: €1,440 For a 120 sq. m. property.
Income Tax: 2.71% Assumptions: Owners are a non-resident couple drawing US$ / €1,500 per month in rent, with no other local income.
Roundtrip Cost: 12.71% The total cost of buying and then reselling an apartment. Includes:

* all transaction taxes and charges:
* lawyers' and notaries' fees
* agents' fees

Assumptions: The buyers are non-resident foreigners. The apartment cost US$250,00 / €250,000.
Cap Gains Tax: n.a. Assumptions: The property was bought for US$250,000 / €250,000, and sold 10 years later, after a 100% appreciation.
Landlord and Tenant Law: Pro-Tenant Rating is based on a detailed study of each country’s law and practice.

News & Discussion

Free Newsletter

Fortnightly updates from the global property arena directly to your inbox.

Email Address:

Connect to professional advice in Germany


Download free property reports from international research houses

Our Newsletter

Fortnightly updates from the global property arena directly to your inbox.

Manage subscriptions