Rising Rents Amid Stable Property Prices in Germany

Germany is experiencing a significant rise in rental prices, most notably in cities such as Berlin, Essen, Frankfurt, Leipzig, and Düsseldorf. Rental costs have surged due to structural supply bottlenecks and high demand, with Berlin seeing an 8.5% increase. Despite the upward trend in rents, residential property purchase prices have remained largely stable. This stability in the real estate market is reflected in a slight decrease of 0.4% for condominiums and a minor increase of 0.6% for single and two-family homes.

The supply of new housing remains insufficient, with only 260,000 new homes expected in 2024 and 230,000 in 2025, falling short of demand. Buyers are cautious and price-sensitive, while sellers must adapt to the evolving market conditions. Although interest rates are stable or declining, and incomes are rising despite economic challenges, the rapid price dynamics of the 2010s are unlikely to return. Experts anticipate potential price increases in 2025 due to these factors. The housing market remains a critical issue, with high rents and ancillary costs pushing more people into financial strain.