German residential becomes increasingly selective

German residential property prices rose for the fourth consecutive quarter, albeit at a slower pace, according to new data from the Federal Statistical Office. The headline figures, however, increasingly conceal a market moving in different directions. Prices in the first quarter of 2026 were up 1.4% year-on-year, down from 2.6% the previous quarter and 3.8% a year earlier. Less obvious is where the remaining growth is now coming from.

For the past two years, the Top 7 cities — Berlin, Hamburg, Munich, Cologne, Frankfurt, Stuttgart and Düsseldorf — led the recovery. That is no longer the case. Apartment prices there rose just 0.3% year-on-year, while sparsely populated rural districts climbed 3.6%. Densely populated rural districts were the only segment to fall outright, down 0.4%. The geography of growth has reversed.

Houses show a similar pattern, with a twist. Detached and semi-detached homes in the Top 7 rose 1.4%, the strongest gain of any region, while equivalent houses in sparsely populated areas fell 0.8%. Apartments and houses are moving in opposite directions depending on location, suggesting buyers are weighing space against proximity to city centres differently than two years ago.