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Rents in Germany are rising rapidly: Stuttgart leads with 2.5%!
Rents and purchase prices in Germany will continue to rise in 2025 while the housing market remains tense. Current trends analyzed.
Rents in Germany are rising rapidly: Stuttgart leads with 2.5%!
The rental market in Germany remains very tense at the beginning of 2025. Rents increased by 1.2% in the first quarter compared to the fourth quarter of 2024, which is particularly noticeable in the areas surrounding the seven largest cities, where rents rose by 1.5%. In the metropolises themselves there was an increase of 1.1%. Particularly striking is Stuttgart, which recorded the strongest increase with an increase of 2.5%, while Leipzig takes the lead with an increase of 7.7% compared to the previous year. Rents nationwide rose by 4.3% within a year.
Despite economic uncertainty, demand for rental apartments remains high. A lack of new buildings continues to cause a tense situation on the rental housing market. The real estate market has stabilized, with moderate growth expected in the long term. At the same time, the purchase prices for condominiums rose by 1.2% in the first quarter of 2025. Single- and two-family homes rose in price by 2.3%, while the prices for houses in the areas surrounding the largest cities rose by 2.5%. Apartments in large cities with more than 100,000 residents saw a 2% increase.
Cost increases in detail
Year-on-year price increases in certain cities are particularly noticeable. Prices rose by 6.3% in Essen and by 5.8% in Leipzig. These developments indicate that housing in Germany is becoming increasingly more expensive, especially in large cities, where rents have been rising steadily for over a decade. In the most important cities, the average rent in 2024 is already:
| City | Average rent (€/m²) | The change (%) |
|---|---|---|
| Munich | 08/22 | +6.5 |
| Frankfurt am Main | 19.17 | +8.0 |
| Berlin | 18.18 | +8.5 |
| Freiburg | April 17th | +6.8 |
| Stuttgart | March 17th | +5.3 |
| Hamburg | 16.61 | +10.0 |
| Heidelberg | 16.20 | +6.9 |
| Potsdam | 15.99 | +7.1 |
| Mainz | 15.71 | +6.2 |
| Dusseldorf | 15.58 | +6.5 |
| Leipzig | 14.28 | +5.8 |
Political influences and outlook
The political framework has a significant impact on the real estate market. The Bundestag has released 500 billion euros for infrastructure and housing construction to counteract the housing shortage. However, the special fund's announcements are associated with an increase in capital market interest rates, which makes real estate financing more expensive. Reforms in the construction sector, such as faster approval procedures and the promotion of serial construction, are anchored in the coalition agreement. Despite the planned measures, the rent cap remains in place for the time being, which could potentially inhibit investment.
The estimate for the number of new homes in 2025 is between 150,000 and 200,000, well short of the policy target of 400,000. Experts also expect further rent increases of 4-5% in large cities. In the long term, rent increases of 30-50% are forecast in popular cities by 2035. Low-income households are particularly affected by these developments and spend over 35% of their income on rent.
The situation on the housing market remains tense and the challenges in the area of affordable housing are still present. For more information on these developments, please refer to the articles from IWD and FTD.