Uneven development of real estate prices

The data on which the vdp index is based has been collected by vdpResearch since 2010 and covers price developments across the entire German market for residential, office and retail properties. The basis is the evaluation of real estate transaction data from more than 700 credit institutions – this sets the vdp index apart from many other price indices. As a result of a new cooperation between vdpResearch and the Deutsche Bundesbank, the index methodology for some sub-indices was adjusted at the beginning of this year. 2022 has been defined as the new base year (index value = 100). The historical data has been adapted to the new methodology.

The overall year-on-year increase in the index is due to residential property prices, which rose by 1.9% compared with the second quarter of 2025, while office and retail property prices recorded price decreases of -1.2% and -0.2% respectively in the period.

"As expected, the commercial real estate market is reacting more strongly than the residential real estate market to geopolitical developments, increased inflation expectations and interest rate developments."
vdp Managing Director Jens Tolckmitt

"For the first time in a year and a half, prices in the property classes moved inconsistently again: While office and retail properties fell in price, prices for residential properties continued to rise – albeit less dynamically than in previous quarters," commented vdp Managing Director Jens Tolckmitt. As expected, the commercial real estate market reacts more strongly and more directly than the residential real estate market to geopolitical developments, the consequent increase in inflation expectations and the resulting interest rate development. Unsurprisingly, the subdued economic development is also having a greater impact on commercial real estate than on residential real estate, where the continuing excess demand continues to lead to price increases.

Among residential properties, which showed a price increase of 1.9% overall over the year, condominiums rose the most: between the second quarter of 2025 and the second quarter of 2026, price growth for them amounted to 2.6%. Growth was somewhat lower for owner-occupied homes (2.0%) and multi-family dwellings (1.6%). With increases of 0.3% compared with the first quarter of 2026 for multi-family dwellings, 0.4% for owner-occupied homes and 0.5% for condominiums, prices have recently developed at a comparable level. Overall, this resulted in an overall quarter-on-quarter increase in residential property prices of 0.3%.

The situation on the German residential real estate market remained tense from April to June of this year. The ongoing shortage of apartments also caused new contract rents in apartment buildings to rise further: At 3.2% compared with the same quarter a year earlier, however, rents recorded a smaller increase than in previous quarters. As rents under new contracts rose more strongly than the prices of multi-family dwellings, their yield, as measured by the vdp index for real estate interest rates, rose by 1.5%.

"We support the measures initiated by the federal government. It is important that these are now implemented quickly and have an effect."
vdp Managing Director Jens Tolckmitt

Tolckmitt assessed the recent announcement by the federal government of an upgrade of the building code as well as other housing policy and regulatory projects positively: "The fact that planning procedures are to be drastically accelerated and that exaggerated technical requirements can be deviated from is exactly the right signal to all market players." In addition, the now announced abolition of the sectoral systemic risk buffer for residential real estate financing, which burdens financing, is long overdue. Even when it came into force in 2022, there was no objective justification for this measure.

The federal regulation, which is also envisaged, which is intended to prevent the socialization of large private rental housing stocks at the state level, which is currently being intensively discussed in Berlin, is also welcomed: "Debates about measures that call ownership into question are causing considerable damage to the real estate market and Germany as a business location – and are already doing so. Because they cause the migration of private capital, which is urgently needed for new construction." Beyond this, the state funds to be raised for socialization could be used more sensibly for the creation of new, additional housing in order to reduce the shortage situation. The vdp supports all projects initiated by the federal government that serve to create housing. It is important that these projects are now implemented quickly and have an effect so that the housing market is actually stimulated in the medium term.

The top 7 cities recorded a slightly higher year-on-year increase in residential property prices (2.1%) than in the whole of Germany. Among the conurbations, residential property prices rose most sharply in Hamburg (3.8%), followed by Cologne (2.5%), Frankfurt and Düsseldorf (2.4% each) and Munich (2.3%). This was followed by Berlin and Stuttgart with growth rates of 1.6% and 0.7% respectively. Overall, the price increase in the top 7 cities was markedly lower than in the first quarter, when four top 7 cities recorded price increases of more than 4.0% compared to the previous year.

At an average of 1.5%, new contract rents in the top 7 cities rose noticeably less than in Germany as a whole (3.2%). While the highest rent growth was recorded in Düsseldorf (3.6%), Berlin again recorded the lowest growth (0.6%). Measured by the vdp real estate interest index, yields in the conurbations fell by 0.7%.

In contrast to residential property prices, the prices of offices and retail properties fell in the second quarter of 2026 (-1.2% and -0.2% respectively) – the first year-on-year decline after five quarters. The drivers were the developments on the current fringe: office prices fell by -1.5%, retail properties by -0.7%.

While office rental growth was 2.7% compared to the second quarter of 2025, it was 1.5% for retail properties. Based on price and rent developments, yields as measured by the vdp real estate interest rate index rose by 4.0% for offices and by 1.6% for retail properties.

"An ambitious implementation of the reform agenda and the calming of geopolitical conflicts can have positive implications for the economy and thus for the commercial real estate market."
vdp Managing Director Jens Tolckmitt

"The further development of the commercial real estate markets depends, among other things, on whether and when the numerous geopolitical conflicts are calmed down and the reform agenda announced by the German government is implemented and takes effect," Tolckmitt explained. Both could have positive implications for the economy and thus for the commercial real estate market if the numerous challenges are tackled ambitiously.

* The rates of change mentioned here in the "Top 7" section are still based on the earlier vdp index methodology. They temporarily differ from the values shown in the Top 7 index of the Deutsche Bundesbank. By the time the index is published for the first time in 2027 at the latest, uniform top 7 values will be reported.