Germany’s property prices are falling sharply

Germany’s property market is slowing down significantly in the second quarter of 2026. Purchase prices are rising only marginally, the residential property market is losing momentum, and office property values are once again falling. For investors, developers and lenders, this is heightening uncertainty in Switzerland’s most important neighbouring market.

In the second quarter of 2026, property purchase prices in Germany rose by just 1.3 per cent year-on-year and actually fell by 0.1 per cent quarter-on-quarter. This suggests that the recovery is clearly losing momentum. This is particularly worrying for market participants who, following the stabilisation in 2025, had already been anticipating a broader turnaround.

This setback comes against a backdrop that remains characterised by higher interest rates, high construction costs and economic uncertainty. According to the Association of German Pfandbrief Banks, it was precisely this combination that had already slowed price growth at the start of the year. The Kiel Institute also recently showed that momentum is slowing in terms of asking rents and house prices.

Housing market growing at a snail’s pace
Residential property prices rose by 1.9 per cent in the second quarter compared with the same quarter last year, and byjust0.3 per cent compared with the previous quarter. Within the segment, detached houses performed best, up 2.6 per cent year-on-year. Freehold flats rose by 2.0 per cent. Multi-family houses fell again by 1.6 per cent and remained the weakest residential segment despite rising rents.

For the seven largest cities, the index reports a year-on-year increase of 2.1 per cent. Hamburg saw the strongest growth at 3.8 per cent, followed by Cologne at 2.5 per cent. Stuttgart brought up the rear with 0.7 per cent. Meanwhile, Munich remains the most expensive market. According to data from ImmoScout24, asking prices there stood at around 8,346 euros per square metre.

Rents continue to rise, but at a slower pace
The trend is also levelling off on the rental front. Nationwide, new rental rates for flats in multi-family buildings rose by 3.2 per cent year-on-year between April and June. In the major cities, the increase averaged just 1.5 per cent. Berlin recorded a quarter-on-quarter increase of 0.6 per cent, Düsseldorf 3.6 per cent, Hamburg 3.3 per cent and Munich 2.4 per cent.

Offices are slipping again
The situation is taking the sharpest turn in the commercial sector. Office property prices fell by 1.2 per cent in the second quarter of 2026 compared with the previous year. Retail property prices fell by 0.2 per cent. For developers, property owners and lenders, this is a warning sign, as it means that the very segment which had recently shown the first signs of stabilisation is now weakening again.

For the Swiss property sector, keeping an eye on Germany is more than just a matter of observing a neighbour. The market serves as a benchmark for capital flows, valuations, financing conditions and the risk assessment of institutional investors across Europe. If price growth there stalls once again, this will also increase the pressure on cross-border portfolios and on expectations regarding exit opportunities in the commercial sector.