The real estate market in Germany has been through turbulent years: the pandemic, interest rate turnaround and economic uncertainties have had a major impact in recent years. However, a new trend is emerging in 2025 – stabilization with slight upward potential. Clear developments can be observed in the metropolitan regions in particular, especially Munich. In this article, we analyze property price trends in Germany in 2025 and take a detailed look at the situation in the Bavarian capital.
Germany-wide overview: Real estate prices on the rise again
After a phase of sideways movement and partly falling prices in 2023, property prices have been rising again slightly since the last quarter of 2024. According to Europace, the average price for a condominium in Germany is currently €3,423/m² (as of December 2024). Prices are also rising slightly for existing and new builds:
- Condominiums: +0.58% (December 2024 to January 2025), +6.81% year-on-year
- Existing properties (detached and semi-detached houses): -0.28 % (monthly), but +4.10 % year-on-year
- New builds: +0.09% (monthly), +0.65% year-on-year
The figures show: The market is gaining momentum again. The EPX overall index – an indicator of price trends on the real estate market – also rose by 3.67% in January 2025 compared to the same month last year.
Price drivers 2025: Why prices are rising
According to experts such as Florian Pfaffinger from Expertenrat Dr. Klein, the slight upward trend will continue in 2025. An average price increase of 1-3% is expected nationwide.
There are many reasons for this:
- Rising incomes and moderate inflation will improve purchasing power.
- Falling construction interest rates are making it easier to access financing again.
- Demand continues to exceed supply, particularly in large cities.
- Existing properties and condominiums are becoming increasingly attractive as a cheaper alternative to new builds.
However, it should be noted: Not every property benefits equally. Older houses with poor energy efficiency are under particular price pressure. Those who are prepared to modernize energy
Regional differences: Where real estate is still affordable
Despite the general price increase, there are significant regional differences. While condominiums in Dortmund only cost an average of €2,205/m², Munich is at the top with €7,273/m². For an average 90 m² apartment, this means
- Dortmund: approx. €198,450
- Munich: approx. €654,570
The picture is similar for existing houses:
- Munich: Ø €5,954/m² → for 150 m²: €893,100
- Hanover: Ø €2,554/m² → for 150 m²: €383,100
The differences show how strongly location factors influence pricing. However, affordable properties can still be found, particularly in peripheral areas or less popular districts of metropolitan regions.
Munich 2025: High prices, high demand
In Munich, home ownership is and remains a luxury good. Demand is unbroken, despite the rise in interest rates. The reasons:
- Munich offers an above-average quality of life and a strong economy.
- The housing shortage is glaring – and new construction projects are progressing too slowly.
- Demand also remains high in the surrounding area – commuters are willing to travel longer distances to buy property.
Although there were slight price corrections in 2023 and early 2024, prices were already on the rise again in the 4th quarter of 2024. This trend is also expected to continue in 2025 – especially in the condominium and existing house segment.
The Schwabing, Lehel, Haidhausen and Bogenhausen districts in particular are seeing persistently high transaction volumes. At the same time, the surrounding areas – for example in the south and west of Munich – are increasingly becoming the focus of affluent target groups.
Interest rates 2025: still affordable financing despite increase
The development of building interest rates remains a critical factor. Having risen sharply since 2022, the effective interest rate was around 3.52% at the beginning of March 2025. The monthly burden for a loan of €350,000 is therefore around €1,586.67.
Nevertheless, interest rates remain moderate by historical standards – many buyers see this as an opportunity to invest for the long term. Experts expect interest rates to be volatile in the coming months, but not to rise dramatically.
Long-term forecast until 2035: Munich remains a growth market
According to Postbank’s Housing Atlas 2024, real estate prices are set to continue rising in large parts of Germany until 2035 – particularly in economically strong regions such as
- Southern Germany (incl. Munich and surrounding areas)
- Hamburg and Berlin
- Weser-Ems region
Munich plays a special role here: The city remains an absolute premium location where no price correction is expected, even in the long term. Although the price level is already high, strong demand, an influx, high incomes and a limited supply of space are acting as sustainable price drivers.
Conclusion: Buy now – but with strategy
Should you buy a property in 2025? The answer depends very much on your individual situation. But one thing is clear: anyone hoping for a significant fall in prices is likely to be disappointed – at least in sought-after locations such as Munich.
The following applies to prospective buyers:
- Prices are rising moderately – waiting will not make them cheaper.
- Building interest rates are affordable, but susceptible to fluctuation.
- If you are flexible, you can find attractive properties at a discount in rural areas or in the surrounding countryside.
- Energy efficiency and the need for modernization play an increasingly important role in pricing.
We recommend that buyers start their search with a clear financing concept and realistic expectations. In Munich in particular, local market knowledge and professional support are crucial in order to make the most of the best opportunities.
