Real Estate Boom Stalled in 2026 by Rising Interest Rates and Geopolitical Events

The real estate market's recovery, anticipated by many investors in early 2026, has been abruptly stopped. Rising interest rates, the outbreak of war in Iran, and escalating oil prices have stalled the market's rebound. Gerald Hörhan, CEO of Investmentpunk Academy GmbH, assesses that a sideways movement is the most likely scenario, potentially involving a 5% price correction in good locations. He suggests that patient investors with capital and expertise may find opportunities, particularly in Germany and Austria.

The market situation changed rapidly following the conflict's escalation. 10-year US Treasury yields climbed to nearly 4.5%, and many 10-year real estate financing rates in Germany now exceed 4% as of April 2026. This has led to a recalibration of market multiples, with typical factors in prime locations reducing from around 22-23 to approximately 20-21.

Furthermore, energy price volatility introduces uncertainty. With oil prices at $120 per barrel, and forecasts reaching $170, the appeal of alternatives like heat pumps rises. However, electricity prices are also expected to increase if gas and oil become more expensive, highlighting the interconnectedness of energy markets, according to Hörhan.

A less discussed factor impacting the market is the wave of refinancing. Loans originated in 2015 or 2016 are now maturing. This creates pressure as investors may need to refinance at significantly higher interest rates, potentially causing financial strain.

Despite these headwinds, Hörhan notes that the general shortage of housing continues to act as a counterweight to price declines. Construction difficulties and increased demand from immigration support rising rents. He advises investors to remain patient and leverage the current market conditions to identify promising investment opportunities.