Despite these challenges, the construction sector has reported a rise in orders, particularly in residential building, with a notable 5.2% increase in January compared to the previous month.

In Germany's seven largest cities, apartment prices increased by 1.6% compared to the fourth quarter of 2023, although they were down 0.3% from the previous quarter.

This decline was primarily driven by the European Central Bank's aggressive interest rate hikes aimed at combating inflation.

Currently, rising long-term capital market and mortgage interest rates, influenced by a financial package from the Union and SPD, are making housing less affordable and hindering market recovery.

Recent data from the Federal Statistical Office reveals that residential property prices in Germany have seen a modest increase of 1.9% by the end of 2024 compared to the previous year.

The average rate for ten-year financing has risen to 3.7%, up from 3.22% just three months prior, significantly increasing loan costs for potential homebuyers.

This marks the first annual price increase in over two years, suggesting that residential property prices may have found their bottom, according to economist Martin Güth.

In urban areas, apartment prices rose by 2.5% compared to the last quarter of 2023, while single-family and two-family homes saw a 2.2% increase.

The housing market has faced significant challenges since mid-2022, with prices dropping sharply due to rising interest rates, culminating in an 8.4% decline in 2023, the steepest drop in six decades.

However, regional disparities remain, with rural areas experiencing price declines, while urban centers, particularly in major cities like Berlin and Munich, continue to see price increases.

Although prices have stabilized since last summer due to temporarily lower interest rates, experts do not anticipate a return to the property boom era experienced during the low-interest period.

Looking ahead, analysts predict a 3.5% increase in property prices for 2025, with a continued growth of 3% expected for each of the following two years.