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Germany's premium residential property market is beginning to show the same adjustment dynamics that have reshaped the broader housing sector—but with striking divergence between cities, suggesting buyer psychology may now matter as much as pricing.
A new analysis by estate agency DAHLER, based on data from property portal ImmoScout24, shows that the supply of high-end apartments and houses in Germany's seven largest cities rose significantly in late 2025 while asking prices declined across most markets.
The study examines the premium segment defined as the most expensive 10% of residential listings on ImmoScout24. In the fourth quarter of 2025, the number of premium apartments offered in the Top 7 cities increased by 13.3% compared with the same period a year earlier. At the same time, the median asking price across these markets fell by 6.2% to €8,781 per square metre. The premium housing segment showed a similar pattern: supply rose by 11.1%, while median asking prices dropped by 7.7% to €9,017 per square metre.
"A significant increase in supply is increasingly meeting stagnating to declining demand and a generally negative price trend," said Björn Dahler, managing director of DAHLER. Buyers are taking more time to assess financing conditions and economic uncertainty, he noted, while sellers are gradually adjusting their expectations to reflect the changed market environment.
Taken together, the figures suggest that even the upper end of Germany's housing market is no longer insulated from the effects of higher borrowing costs and more cautious buyers.
Within the overall national trend, Frankfurt presents an exceptional case. Although asking prices for premium apartments fell sharply—declining by 13.8% to €9,929 per square metre, the steepest drop among the Top 7 cities—demand in the segment rose by more than 46% year-on-year. The premium housing market showed similar strength, with enquiries up 44.9% despite a 3.2% price decline. Frankfurt is the only Top 7 city where demand for premium houses increased.
The divergence suggests that buyers in Frankfurt have accepted higher interest rates as a permanent feature rather than a temporary obstacle. This psychological shift looks to have unlocked the market even as prices fell. Buyers are no longer waiting for supposedly cheaper entry points but are transacting at current levels because they view them as the new equilibrium.
Berlin's premium residential market illustrates the opposite dynamic. Supply of premium apartments in the capital rose by 17.4% year-on-year in the fourth quarter of 2025, while the median asking price fell by 6.4% to €8,745 per square metre. Demand, measured through enquiries on ImmoScout24, declined by 24.2%.
The correction is even more visible in the premium housing segment. Median prices for high-end houses in Berlin fell by 19.7% compared with the previous year—the sharpest decline across all Top 7 cities—while supply increased by 12.5%. According to DAHLER's Berlin office, houses are more sensitive to financing costs, renovation expenditure and energy-efficiency requirements, all of which raise the overall investment volume.
Across the broader market, the rising supply of premium properties appears to be encountering buyers who remain more selective and slower to commit outside Frankfurt.
Despite the recent declines in asking prices, the data does not point to a structural weakening of demand for high-end housing in Germany's largest cities. Instead, the premium segment appears to be undergoing the same process of adjustment visible across the wider residential market—but with outcomes increasingly determined by local buyer psychology rather than national pricing trends.
For investors evaluating premium residential exposure, the Frankfurt-Berlin divergence suggests that acceptance of current financing conditions may matter more than absolute price levels in determining liquidity. Markets where buyers have stopped waiting for improvement are transacting despite falling prices. Markets where buyers remain cautious face ongoing supply-demand imbalances regardless of price adjustments.
Developments in the premium segment are particularly noteworthy because this part of the market typically reacts later to cyclical changes. High-income buyers rely less on leverage and are therefore less sensitive to interest-rate movements than the broader market.
The fact that prices are now softening even at the top end of the market suggests that Germany's residential repricing cycle has become more comprehensive. Rather than signalling a crisis, the current phase is more likely to reflect a gradual normalisation in which supply, demand and financing conditions are finding a new equilibrium, at different speeds and price points across individual cities.
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