Record residential prices within reach in Germany as Iran impact hits

German residential property prices are approaching the record levels reached during the summer 2022 boom, according to data from two of the country's most authoritative sources of actually transacted prices — but geopolitical uncertainty, rising mortgage rates and persistent buyer hesitancy mean the recovery is proceeding with caution rather than conviction.

The Association of German Pfandbrief Banks (VdP), whose index is based on actual transactions from more than 700 member institutions, reported that residential property prices rose 4.2% nationally in Q4 2025 compared with the same quarter of the previous year, reaching 4.7% in Germany's seven largest cities. "Prices for residential property are now not far from the record levels reached in the summer of 2022," said VdP President Gero Bergmann at the association's annual press conference in Frankfurt. The lending data underlines the scale of the financing recovery: Pfandbrief banks granted €148.6 billion in new property loans in 2025, up 15.7% on the previous year, with residential financing leading the way at €92.6 billion, a rise of 17.5%. Multi-family homes recorded growth of around 25%. Bergmann noted that the increase in residential lending was beginning to feed through into new housing construction, a development he described as particularly encouraging given the sector's prolonged stagnation.