The German housing market is not only under pressure, it is changing structurally. This is the conclusion of the new white paper “Housing Market Germany 2026 – If Not Now, When?” by PTXRE. The analysis shows that in addition to the well-known challenges such as supply shortages and rising rents, qualitative changes in demand, new investor logics and a changed yield profile are becoming increasingly important.
Demand is becoming more complex
While the high tenant rate of around 53 percent and ongoing urbanization continue to be key drivers of demand for rental apartments, the structure of demand is changing noticeably. A clear influencing factor is the number of one-person households, which is now over 42 percent. Smaller households and an ageing society are leading to a greater differentiation of housing needs. Another driver is increasing mobility. There is an increasing demand for flexible living concepts, smaller units and age-appropriate solutions.
Andreas Trumpp, Head of Market Intelligence & Foresight at PTXRE, says: “The demand for housing is not only continuing to rise, it is becoming more complex. Anyone who invests or develops today must have a much stronger understanding of which target groups will shape the market in the future with which requirements.”
Supply side continues to be structurally restricted
At the same time, the supply side is lagging behind demand. Despite a slight recovery in building permits, completions are likely to fall to below 200,000 units in 2026 and thus remain well below the political target of 400,000 apartments per year. Regulatory measures such as accelerated approval procedures or simplified building standards can provide selective impetus, but do not address the fundamental economic barriers to residential construction: in particular, high construction costs, financing costs and regulatory requirements.
Rental development with further potential
“Against the backdrop of the ongoing structural shortage of housing supply, rents are expected to continue to rise in the medium term,” said Trumpp. In economically strong regions, PTXRE forecasts rent growth of over three percent annually and thus a rate above inflation expectations.
Investment logic shifts
Beyond fundamental market trends, the white paper identifies a clear shift in the investor’s perspective. Although residential real estate remains the preferred asset class of institutional investors, return expectations are changing fundamentally. After years of performance driven by the change in value, stable current income is coming more into focus. Currently, earnings yields in the range of around 3.0 to 4.5 percent characterize the total return, while increases in value play a smaller role in the short term.
“We are seeing a shift in investment logic. The residential real estate market is again being driven more strongly by stable earnings, not by short-term price increases,” says Trumpp.
Market in transition phase – selective opportunities for investors
Overall, the German housing market is in a transition phase, according to PTXRE. The significant valuation adjustments appear to have largely taken place, while transaction markets are slowly stabilizing. For long-term investors, the current environment can therefore represent a strategically interesting entry point.
