Report H1 2025

Residential Report Germany H1 2025

Report Germany H1 2025

Trends and insights of the residential market in Germany

Germany’s population has grown 5% over the past 10 years (2023: 84.7 million). The latest spatial planning forecast (based on the 2022 census) expects population growth to stabilise over the next two decades (2025-2045). Therefore, rent prices are likely to continue their lively growth trajectory against a backdrop of potentially sluggish residential construction activity in the years to come.

Find out more about current (rent) prices in Berlin, Frankfurt, Hamburg and Munich and and the price trend at a district level in our new District Dashboards. Click here for detailed rent and price comparisons:

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CONTENTS AT A GLANCE

Prologue [»]
Residential investment market Germany
Rental housing market Germany
Market data on major German cities
Factsheets on 109 cities

Overview | Prologue| Residential investment market | Rental housing market | Download

PROLOGUE

NEW-BUILD RENT PRICES WITH STRONG UPWARD TREND SINCE H1 2025

New-build rent prices have been following a particularly steep upward trend over the past 12 months based on a comparison of short-term (vs H1 2024) and long-term (vs 2015) price trends. Although rents in Germany’s top cities have risen roughly 4.4% per year since 2015, they were up an average of 8% compared to H1 2024 alone.
This recent above-average performance can be attributed to ongoing excess demand, a slump in completion rates and high construction costs.
Hamburg and Düsseldorf posted the steepest rent price increases over the past 12 months, most likely due to the higher supply of high-end residential space that hit the market in the first half of the year. The above-average increase in rent prices in the B-cities surveyed during this period is striking as well. With the exception of Dortmund, Germany’s B-cities saw rents rise between 8% and 10%. Certain catch-up effects are likely to have taken hold here, with initial rent prices comparatively low.

DISPOSABLE INCOME IN THE COUNTRY'S TOP CITIES UP AN AVERAGE OF 3.8 % P.A.

Disposable income appears to be following a trend similar to that of rent prices. In the cities surveyed, the increase in income between 2015 and 2025 ranged from 3.1% in Hamburg to 4.6% in both Leipzig and Dresden, putting the latter two cities clearly in the lead.
With the exception of Munich (+4.2%), income seems to have experienced a particularly pronounced increase in those cities in which income levels are still quite low.

POSITIVE CORRELATION BETWEEN RISING INCOME AND RENTS IN GERMANY'S TOP CITIES

A comparison of the current trend in disposable income and rent prices for stock units between 2015 and 2025 shows a positive correlation. In other words, cities in which average household income experienced the steepest increase also saw a strong rise in rent prices during the same period.
The trends in Leipzig and especially in Berlin are particularly striking — and quite out of the norm. Households in Berlin have seen an average increase in income of 4.0% per year since 2015. Rent prices, on the other hand, have risen at a comparatively steeper rate of 6.5% p.a. Income levels in Leipzig have increased at a slightly higher rate than in Berlin, posting 4.6% p.a. This increase, however, was offset by a steeper rise in rent prices of 5.5% p.a.
The increase in rent prices has therefore been exceeding that of income in almost all of the country’s top cities with discrepancy being particularly high in Berlin and Leipzig. In the B-cities Dortmund and Dresden, however, income has risen slightly more than rent prices. Overall, this trend can also be seen in the change in the percentage of household income that people are spending on rent, which impacts affordability.

SHARE OF DISPOSABLE INCOME SPENT ON RENT UP SLIGHTLY OVER THE PAST 10 YEARS

Mirroring the trend in income and rent prices, the amount of household income being spent on rent has also shifted to varying degrees in Germany’s top cities. The share of disposable income being spent on rent has risen particularly sharply in Berlin, where it is up five percentage points. In 2015, Berlin residents were spending an average of 21% of their income on rent. In 2025, this number rose to 26%. The affordability of rental apartments in Berlin has deteriorated significantly as a result.
Affordability remains relatively stable, however, in four of Germany’s eleven top cities (Düsseldorf, Cologne, Munich and Essen). Affordability in Dresden and Dortmund has even improved in purely mathematical terms.
Nevertheless, the affordability of housing does not appear to have worsened across the board. This observation applies to less than half the top cities surveyed, and six of the eleven cities posted a stable rent/income or even saw slight improvement.

GERMANY POSTS LOW RENTS IN RELATION TO DISPOSABLE INCOME

The affordability of housing in Germany is comparatively more favourable than that of other European housing markets. Rent price affordability is a heavily discussed topic and, contrary to the trends seen over the past 10 years, affordability in Germany has actually improved slightly, at least on average. One of the main reasons behind this shift is most likely the significant increase in real income growth in Germany over the past two years.
According to Eurostat, residents of other European countries on average are spending a significantly higher percentage of their household income on rent. On average, people in the UK spend 34% of their household income on rent, in Spain 27% and in France and Austria 23%.

District Dashboards

In our new district dashboards, you can find out more about the current (rent) price level for Berlin, Frankfurt, Hamburg and Munich and its development at the small-scale level of the districts.

Click here to learn more!

KEY TAKEAWAYS

Residential properties posted €4.5bn in transaction volume at the end of H1 2025. With this result, residential maintains its status as the asset class with the highest transaction volume in the German real estate market. The significant increase in the share claimed by high-volume portfolios throughout the country, including those in the value-add segment, is a positive indicator of sustained market recovery. Signs of an uptick in sentiment can also be seen in increased activity by foreign investors, particularly those from the USA, who are again starting to snap up attractive investment opportunities.
The price trend on new-build rental market has intensified yoy in many of the country’s top locations, coming in significantly higher than during the entire period under review between 2015 and H1 2025. This can mostly be attributed to excess demand in Germany’s major cities, a slump in new-build completion rates and persistently high construction costs.
There tends to be a positive correlation between the development of average rent prices and income levels in the country’s top cities. Overall, however, rent prices (existing stock) have risen an average of +4.3% over the past 10 years at a slightly higher pace than income levels (+3.8%). Nevertheless, the share of household income being spent on rent only rose significantly in roughly half of the top cities surveyed.
Compared to other European core housing markets, Germans spend a lower percentage of household income on rent (around 20%), at least on average.

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