Yes 2% is below inflation. I suppose the point is that the 2% figure is an overall German average, and hides hot spots (as well as the very weak areas). Much of rural Germany (esp. in the East) must be seeing negative growth (poor demographics and also movement of people to employment centres), which means the hot spots are working hard to give an overall positive result. Due to poor reporting it's tough to get good and reliable localised mkt price data, but German cities, such as Munich/Berlin, tick all the right boxes and in the long run look a very good buy at the moment.