Berlin, April 27, 2026 Iran war effects on German real estate market The war in Iran is starting to affect Germany’s real estate market, with prices for owner-occupied apartments and single- and two-family houses rising slightly in the first quarter, according to the Institut der deutschen Wirtschaft (IW). The conflict in Iran, coupled with rising energy prices, has begun to ripple through Germany’s housing sector. The IW reported a 0.1 percent increase in prices for owner-occupied apartments and single- and two-family houses in the first quarter compared to the previous quarter. Over the past year, prices for owner-occupied apartments rose by 2.5 percent, while single- and two-family homes saw a 0.7 percent increase.
Market Reactions and Inflation Concerns
The capital market has reacted swiftly to the geopolitical tensions, with long-term loan interest rates climbing by approximately 0.3 percentage points due to inflation worries. "Der Krieg im Iran und die damit verbundenen Steigerungen der Energiepreise, insbesondere von Öl, zeigen erste Auswirkungen auf den Wohnungsmarkt," stated the IW, highlighting the direct link between the conflict and housing market pressures.
Higher interest rates and construction costs, exacerbated by the Middle East conflict, are expected to strain new construction projects. This could further tighten the rental market, pushing rents upward. The IW’s analysis, which includes 8 million rental and 3.7 million purchase offers, underscores the growing challenges in Germany’s housing sector.