BENGALURU, Nov 22 Reuters German home prices will reverse their relentless twoyear fall and rise 3 next year and in 2026 on lower borrowing costs, according to analysts polled by Reuters who said rental growth would outpace housing inflation in the coming year.

Once riding high on the wave of low interest rates, the property market in Europe39;s largest economy plunged into its worst crisis in decades as a sharp rise in rates after the COVID19 pandemic tipped developers into insolvency.

Prices have plummeted 12 from a peak in Q2 2022 after surging nearly 25 during the pandemic. But the latest data showed activity in the sector is stabilising.

Residential property prices climbed 1.3 during the AprilJune period from Q1, the first increase since 2022, while data from JLL recently showed transactions in the sector rose slightly in the first nine months of the year.

The rebound is likely to continue in the next few years as the European Central Bank, which has already cut its deposit rate by 75 basis points this year, is widely expected to deliver at least another 100 basis points of cuts by end2025.

Average German home prices, which fell 8.5 last year, will decline only 0.3 this year and increase 3.0 next year, according to the latest Reuters survey taken Nov. 1221.

That was an upgrade from a fall of 1.4 and a rise of 2.0 predicted in August. Prices were forecast to climb another 3.0 in 2026.

As mortgage rates decline, the German housing market is poised for…