By Indradip Ghosh
(Reuters) – German home prices will rise around 3% annually over the coming years, according to property analysts polled by Reuters, outstripping overall inflation and further stretching affordability for first-time buyers.
Home prices fell 13% between early 2022 and 2024, the biggest slump in more than a decade, but have risen 3.3% on average during the first half of this year. Consumer inflation averaged 2.3% during the same period.
While still 9% below their 2022 peak, average house prices are forecast to increase 3.5% in 2025, 3.4% in 2026 and 3.2% in 2027, according to the November Reuters poll of 13 property analysts.
The outlook, little changed from a September poll, suggests property price rises will continue to outpace inflation, which is expected to average around 2% over the same period.
The European Central Bank is expected to leave interest rates unchanged at least until the end of 2026, a separate Reuters poll showed. It has already reduced the deposit rate by 200 basis points between June 2024 and June 2025.
“While we expect (home) prices to continue rising, developments on the mortgage side are likely to move sideways or downwards only slightly,” said Soeren Groebel, director of research at JLL.
“Price increases are likely to exceed the latter, thereby reducing overall affordability.”
Permits to build apartments – an important indicator of future construction activity – rose 60% in September from a year earlier, suggesting supply will improve.
But a strong majority of analysts, 10 of 12, said affordability for first-time buyers would worsen over the coming year.
“Purchasing affordability has already worsened this year and, looking ahead, little argues for any imminent improvement,” said Carsten Brzeski, global head of macro at ING.
“Wage growth looks set to slow further given the cooling labour market, mortgage rates are expected to increase gradually, while house prices continue to rise.”
Average urban home rents will increase 3.5% to 5.0% over the coming year, poll medians showed, an outlook unchanged from September.
(Other stories from the Q4 global Reuters housing poll)
(Reporting by Indradip Ghosh; Polling by Aman Kumar Soni and Reshma Ann Samuel; Editing by Ross Finley and Alex Richardson)
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