Conditions for buying a home are improving in Germany. Although prices are again rising slightly (2025: +0.9%), the development of wages is stronger. Therefor the affordability is increasing. This trend is supported by the stabilisation of interest rates. However, low levels of construction activity may still lead to a noticeable excess of demand for housing in some local areas, resulting in sharp local price rises.  

The increased affordability is accompanied by a noticeable rise in transaction volumes in 2025. The affordability of a property is measured using the price-to-income-ratio (PIR). The price for a single house is put in relation to the salary. Last year, an employee spent 8.3 times an average annual gross salary to purchase a detached single-family house with a living space of around 125 square metres in a medium location with a garage. Since 2012, the PIR has risen continuously, reaching almost 10.7 times the average annual gross wage in 2022. Since 2023, wages have risen faster than house prices, meaning that affordability has improved. 

Thuringia and Bavaria continue to represent the respective extremes in terms of affordability 
At a regional level, affordability has improved nearly overall, but the relative rankings of the federal states have hardly changed: With a PIR of 14.9, Bavaria is by far the most expensive federal state for those earning the state-specific average wage, whilst Thuringia, with a PIR of 4.9, is the most affordable, followed by Saarland (5.5) and Bremen (5.9) (see map). In Thuringia, this goes hand in hand with the lowest price level for home ownership in the country. In Bavaria around € 755,000 must be spent on a comparable single-family-house – almost four times as much as in neighbouring Thuringia, where the average price is around € 200,000. 

This reveals a considerable gap between the conditions for acquiring home ownership in the individual federal states – a gap that has, however, narrowed slightly in recent times.

In the city-states of Berlin and Hamburg, as well as in Brandenburg and Mecklenburg-Western Pomerania, the PIR has risen contrary to the national trend. This means that prices for single-family-houses with the mentioned characteristics have risen far more than wages. The PIR currently stands at 9.5 (Berlin) and 9.1 (Hamburg). In Brandenburg, it is at a slightly below-average level of 7.8, and in Mecklenburg-Western Pomerania at 8.6.