Kiel Institute: Rise in Residential Property Prices Is Easing

Development in the Major Cities

Affected include Stuttgart, Hamburg, Düsseldorf, and Cologne. In these cities, the increase in asking prices has diminished compared to earlier survey periods, according to the IfW. Regional differences persist, however, so not all locations are affected equally by the cooling.

The Kiel Institute attributes the development to several factors, including higher interest rates, increased construction activity, and changed demand. The combination of more expensive financing and a growing supply leads to sellers having less room for significant price increases than in previous years.

Analysts Rate Vonovia Posively

In parallel to the market analysis, analysts predominantly rate the stock of the real estate company Vonovia SE positively. DZ BANK rates the stock "Kaufen", as do Berenberg Bank and Jefferies. JP Morgan Chase & Co. assigns the rating "Overweight". Thus, four major firms continue to see potential in the MDax company.

The assessments refer to the record date 05.08.26 and were documented in the respective research notes. According to this, there is agreement on the fundamental recommendation, while the specific price targets and time frames may differ. For investors, this represents broad confirmation of the chosen direction.

Vonovia itself is one of the largest residential real estate companies in Germany and manages an extensive portfolio of apartments. Industry observers note that the development of rents, operating costs, and investments in the building stock remain the focus of valuation.

Outlook: Moderate Dynamics Expected

For the overall market, economists at the IfW expect the price increase to continue to weaken in the coming quarters. A trend reversal toward falling prices is not necessarily associated with this, the experts emphasize. Rather, it is about a return to more moderate growth rates, as was common in earlier market phases.

The data from Kiel and the analyst assessments are read in the industry as interconnected signals. While the market analysis points to a calming, the analysts continue to see arguments for rising prices in Vonovia's business figures and strategic alignment. This reflects the separation between the development in the overall market and the valuation of individual stocks.

Significance for Investors and Policy

Observers in Stuttgart and other metropolitan areas also refer to the significance of new construction activities for further price development. If additional apartments come onto the market, this could further reduce the pressure on existing prices. At the same time, demand remains high in many locations, making significant slumps unlikely.

The IfW intends to continue its analysis at regular intervals, taking smaller cities more into focus. The aim is to create a more complete picture of price development in Germany, which can serve political decision-makers and investors as a basis for further assessments.