🏠 Germany housing prices keep climbing as commercial values soften

Germany’s residential market is still expected to rise by more than 3% a year through 2027, even as commercial property prices have slipped again after a fragile rebound. The split underscores how rate sensitivity is now pushing housing and commercial assets onto different paths.

That tension matters for global real estate capital because Germany remains one of Europe’s deepest institutional markets. The residential outlook comes from a Reuters poll of property analysts, while the commercial decline reflects fresh data showing office, retail and other non-residential values losing momentum again after several quarters of recovery.

The data

Analysts in the Reuters poll expect German home prices to post annual gains of roughly 3% or more through 2027, although affordability remains stretched by higher financing costs. At the same time, Reuters reported that German commercial property prices fell again, reversing part of a fragile recovery and reinforcing the sector’s sensitivity to interest rates.

• Residential prices are forecast to rise by 3%+ annually through 2027
• Commercial values have dipped again after several quarters of gains
• Affordability remains under pressure as borrowing costs stay elevated

What it means for investors

The divergence suggests that Germany’s housing shortage and household demand are providing a floor under residential values, while commercial assets remain exposed to refinancing risk and cap-rate repricing. For investors, that means yield expectations in the office and broader commercial segment are still being reset, even as home prices continue to find support.

The German market is no longer moving as one asset class: housing is recovering on scarcity, while commercial real estate is still trading through the rate shock.

The broader comparison across Europe is important. Markets with tighter supply and owner-occupier demand are proving more resilient than those where institutional pricing depends heavily on debt conditions and exit liquidity.

Bottom line

The data signals that German residential property is likely to remain structurally supported, while commercial real estate faces a slower and less certain repricing cycle.