Composite: Depositphotos.com, REFIRE
Germany’s residential rental market is sending contradictory signals that mask a worsening crisis. The latest GREIX index for Q3 2025 shows rents rising only as fast as inflation, yet apartments are vanishing from listings at record speed. The average time a property stays on the market has fallen to just 23 days, with over 15% disappearing within 48 hours. That is more than double the rate in 2015. What emerges is a paradox where pricing no longer reflects the reality of acute shortage.
The quarterly numbers tell only part of the story. GREIX data show rent growth of just 0.5% across 37 major German cities, essentially flat in real terms. Year on year, rents rose 3.5% nominally or 1.2% after inflation, the weakest performance since late 2021. Project manager Jonas Zdrzalek notes that “rental dynamics have cooled significantly after the high increases of recent years.” The weighted average rent across all tracked cities stands at €14.16 per square metre, though local results vary widely.
Leipzig leads quarterly growth at 1.1%, followed by Düsseldorf at 0.7%. Munich, Frankfurt and Cologne each posted 0.5%, and Stuttgart 0.3%. Berlin and Hamburg, by contrast, saw small declines. The hierarchy of absolute rents remains intact: Munich far ahead at €22.96 per square metre, followed by Frankfurt (€17.55), Stuttgart (€16.11), Berlin (€15.82), Hamburg (€15.62), Cologne (€15.21), Düsseldorf (€14.40) and Leipzig (€10.14).
Apartments vanishing at record speed
While asking rents have stabilised, properties are leaving the market faster than ever. The 23-day average listing time represents a historic low. More strikingly, over 15% of all advertised apartments now find tenants within 48 hours. In Berlin, almost a quarter vanish within two days, triple the 2015 rate. “The shortage of supply continues despite moderate price developments,” says Zdrzalek of the Kiel Institute for the World Economy, which largely manages the index. “The market for apartment seekers remains extremely tight, especially in large cities.” Overall supply sits about 15% below 2015 levels, even after a modest 3.8% quarterly recovery. Hamburg and Leipzig have fared worst, with listings nearly halved over the decade. The data point to structural shortage, not temporary constraint.
The scarcity is also changing behaviour. Tenants cling to existing contracts because comparable accommodation at similar rents is virtually unobtainable. Properties that once cycled back to market are now held indefinitely. The longer the crisis persists, the less mobile tenants become, further reducing turnover and reinforcing the imbalance.
A market split in two
The ifo Institute describes a rental market that has effectively fractured into two tiers. In the seven largest cities, new-contract rents have jumped around 75% since 2013, while existing contracts rose far more slowly. The premium for new leases now averages €4.48 per square metre, or 48% above what sitting tenants pay. Berlin shows the starkest divide, with new contracts commanding a 70% premium over existing ones, followed by Munich at 45% and Hamburg at 37%. Cologne, Frankfurt, Stuttgart and Düsseldorf range between 30% and 36%. In practice, regulated rents have protected sitting tenants, while newcomers face sharply higher costs.
Affordability has held relatively steady for those with long-term leases. Low-income households still spend about 35% of income on rent, a level broadly considered sustainable. But for similar households entering new contracts in large cities, that burden now approaches 50%. “If workers can no longer afford to live in the cities, the cities will lose economic power,” warns Oliver Falck, head of the ifo Centre for Innovation Economics. This reduced affordability also erodes labour mobility. Tenants stay in unsuitable flats because moving would mean financial overreach. Workers cannot relocate for better jobs, young professionals are priced out of city centres, and families remain stuck in homes too small to match rising incomes.
Some geographic shifts are also reshaping the map. East German cities continue to catch up, with Erfurt posting quarterly growth of 1.3%, Dresden 1.1% and Chemnitz 1.0%. By comparison, Berlin rose 0.7% and Munich just 0.3%. Mid-sized cities are reaching rent levels once reserved for major metropolitan areas. Münster (€13.87 per square metre), Potsdam (€13.73) and Bonn (€13.55) now rival Düsseldorf (€14.25) and surpass Leipzig (€10.10). Münster’s 3.5% quarterly surge is the strongest nationwide, well above the 0.7% average. For investors, such trends suggest that sustainable growth may increasingly lie in secondary markets with solid fundamentals rather than saturated A-cities.
Scale of the crisis
Federal government data offer useful perspective. Average existing rents across Germany stood at €7.62 per square metre in 2024, well below the €10.92 achieved by advertised re-lets. Existing contracts rose only 2% annually between 2022 and 2024, far behind inflation of 5%. That gap explains much of the new-lease premium. Germany remains a nation of renters, with roughly 25 million properties, about 58% of the total, tenanted. One in five renter households now receives some form of housing benefit, with 4.7 million households supported as of late 2023. Total household spending on housing reached €451 billion in 2024, most of it in the rental sector.
REFIRE: The moderation in rent growth risks creating the misleading impression that the market is normalising. The real crisis lies in availability, not pricing. Germany is facing the consequence of a decade of under-building, compounded by regulatory frameworks that deter new supply and slow the return of existing units to market.
For investors, price signals have become disconnected from fundamentals. Returns will increasingly come from creating new supply rather than capturing rent growth in existing stock. Development-focused strategies, though longer and more complex, are likely to outperform simple acquisitions, particularly for firms integrating housing into recruitment and retention strategies.
The paradox of cooling prices alongside worsening scarcity will persist until Germany tackles its supply deficit at scale. That remains a multi-year challenge, with no meaningful policy catalyst yet in sight.