Following the appearance of the COVID-19 epidemic, there has been a substantial increase in real estate values in Germany. This occurrence was unforeseen due to many macroeconomic factors such as the unemployment rate and gross domestic product indicating a decline in property prices during this timeframe. This offers an exceptional opportunity to experimentally investigate the precise correlation between interest rates and property prices. The objective of this study is to examine the validity of the real interest rate hypothesis and assess the predictive accuracy of shadow rates. This study used a time series regression analysis to investigate the hypothesis. The time series spans from the first quarter of 2010 to the fourth quarter of 2023. The findings validate that shadow interest rates can exert a significant influence on the rate of property price growth, even after accounting for the effects of economic growth and unemployment. In addition, shadow rates appear to be slightly more accurate forecasters than short-term nominal interest rates. The issue of endogeneity has been effectively addressed through the implementation of an experimental design. The findings have extensive practical ramifications for housing policy and strategies to address the issue of housing affordability.