Taking profits

Between 2015 and 2022, Dresden saw one of the strongest price increases among the larger eastern German cities. Condominiums rose by 60–80 percent on average, and apartment buildings in good locations even by over 100 percent. Then came the interest rate turnaround.

2023 and 2024 brought a correction of 5–12 percent, depending on segment and location. Since mid-2025, prices have stabilised. In 2026 the Dresden market shows a differentiated picture:

• Flats (existing, renovated): €2,200–3,500/sqm, depending on the district
• Single-family houses: €500,000–750,000 in medium to good locations
• Apartment buildings: price multiples between 18 and 25, depending on rent-increase potential

The forecast for 2026/2027: moderate price increases of 2–4 percent per year in sought-after locations. No boom. But no slump either.

What surprises me again and again in conversations with investors: many compare the current market with 2021 and are disappointed. But 2021 was the exception, not the rule. Anyone who measures their return against exceptional years will always sell too late.

There is no bell that rings at the high point. But there are indicators that provide some orientation:

Financing costs: at the start of 2026, building interest rates remain high and weigh noticeably on buyers. The monthly annuity puts purchase prices under more pressure than many owners would like. No short-term easing is on the horizon; if anything, the risk is of further rises in financing costs. For sellers this means: do not speculate on falling rates, but calculate the asking price robustly, check financing capacity early, and separate genuine demand from wishful-price interest.

Supply and demand: in Dresden, the supply of existing properties has risen slightly since 2024. At the same time, demand is picking up again as buyers have got used to the new interest rate level. The balance is currently even — no longer a seller's market, but no buyer's market either.

Building permits: in Saxony, building permits fell by around 25 percent in 2024/2025. Less new construction means less competition for existing properties in the medium term — a positive signal for owners.

Rent trend: rents in Dresden continue to rise, 3–5 percent per year. This supports income values and makes investment properties more attractive.

A property in Striesen, bought in 2016 for €180,000, worth €280,000 today. Sounds like a €100,000 gain. The reality looks different:

• Incidental purchase costs back then: around €12,600 (real estate transfer tax 3.5 percent + notary + land register)
• Incidental sale costs now: around €10,000 (agent's commission, deletion of the land charge)
• Inflation since 2016: around 25 percent — the €180,000 from back then corresponds to around €225,000 in purchasing power today
• Speculation tax: €0 (holding period > 10 years)

Real gain after inflation and costs: around €47,000. Still good. But not €100,000.

With a shorter holding period, speculation tax is added. Anyone who sells after seven years with an €80,000 gain pays their personal income tax rate on it — at 42 percent that is €33,600. Suddenly the gain shrinks considerably.

Private disposals of property are tax-free under §23 EStG if:

• the property has been held for at least 10 years (as an investment), or
• the property was owner-occupied in the year of sale and the two preceding calendar years

For inherited properties: the deceased's holding period is counted. If your father bought the flat in 2010 and you inherit it in 2024, the sale in 2026 is tax-free.

My advice: if you are only one or two years away from being tax-free, wait. The tax saving is almost always greater than the risk of a slight price decline.

Single sale: the classic. One property, one buyer, one notary contract. Works best for condominiums and single-family houses.

Package sale: with several units (e.g. two to three flats in the same building), a package sale to an investor can make sense. Advantage: one negotiating partner, one process. Disadvantage: package buyers negotiate harder and expect a discount of 5–10 percent.

Share deal: for properties held in a limited company or an asset-managing partnership, the company share can be sold instead of the property. Advantage: no real estate transfer tax for the buyer (under certain conditions). This makes your property more attractive to professional investors — and can raise the sale price. Tax advice is mandatory here.

Realising a gain is only half the battle. The other half: what do you do with the money?

• Switching into higher-yielding properties: selling a low-yielding condominium, buying an apartment building with better cash flow. In Dresden there are currently opportunities in up-and-coming locations such as Pieschen or Löbtau.
• Diversification: not everything in property. Part in ETFs, part as a reserve, part as equity for the next property.
• Debt reduction: paying off existing loans to lower the overall burden. Particularly sensible with high interest rates from older financing.
• §6b reserve: for traders and freelancers: the gain from the property sale can, under certain conditions, be transferred tax-free to a new property.