Composite by REFIRE
Asking rents across German cities rose at their slowest annual pace in more than four years in the first quarter of 2026, according to the latest GREIX Rental Price Index published by the Kiel Institute for the World Economy — but the headline moderation masks a structural transformation in the rental market with significant implications for both tenants and investors.
According to the GREIX index, which tracks quality-adjusted asking rents across 37 German cities and regions using hedonic regression methods applied to more than 60,000 listings per quarter, nominal rents rose by 0.5% quarter-on-quarter and 2.9% year-on-year in Q1 2026. That annual growth rate is the lowest since Q4 2021, and represents a sharp deceleration from the 4.5% annual growth recorded in Q4 2025. Adjusted for inflation, rents fell slightly by 0.1% compared to the previous quarter. "The market remains fragmented, with large differences between cities," said Jonas Zdrzalek, GREIX project manager at IfW Kiel.
Among Germany's eight largest cities, Düsseldorf led with quarter-on-quarter growth of 1.9%, followed by Hamburg at 1.6%, Frankfurt am Main at 1.2% and Leipzig at 1.1%. Cologne grew 0.6% and Munich 0.4%. Berlin and Stuttgart moved in the opposite direction, recording declines of 1.8% and 0.2% respectively.
Munich remains the most expensive city by a significant margin at €23.56 per square metre. Frankfurt am Main follows at €17.71, Hamburg at €16.35 and Stuttgart at €16.25. Berlin and Cologne sit in the upper mid-range at €15.84 and €15.67 respectively, with Leipzig marking the lower end of the top eight at €10.41. The weighted average across all 37 GREIX cities stands at €14.36 per square metre.
A market in transition
These figures reflect quality-adjusted asking rents and should be read alongside data from other sources using different methodologies. Federal government data puts the ten-year increase in asking rents at an average of 43% across 14 major cities, with Berlin recording the sharpest rise at 69% over the decade. These variations in reported figures reflect methodology rather than error, but collectively point in the same direction: German rents have risen substantially over the medium term even as the pace of growth is now moderating.
Demand signals support the moderation thesis. ImmoScout24 reported that demand for rental apartments fell 3% quarter-on-quarter in independent cities in Q1 2026. "The pressure on the rental market is easing," said Dr Gesa Crockford, Managing Director of ImmoScout24. The platform's Munich data illustrates the affordability ceiling beginning to constrain the market: apartments advertised at €27 per square metre receive 49% fewer enquiries than those at €16 per square metre.
For residential investors, the near-term moderation needs to be set against a more constructive medium-term picture. Research institute Empirica, in its 2026 housing market report, argues that rents of €18 to €20 per square metre in new-build properties are becoming the structural norm in major cities — not a short-term price bubble but a reflection of underlying construction and land costs. Empirica forecasts continued rent increases of 3% to 4% annually for existing properties upon re-letting, and concludes that new residential construction is returning to profitability in select locations — a signal absent from the market for much of the past three years.
Supply shrinks as furnished rentals surge
The more structurally significant story in the GREIX data concerns not rent levels but the composition of supply. Standard rental listings across the 37 GREIX cities have fallen by 22% since 2015, from 285,000 to around 250,000. In individual cities the decline is far more dramatic: in Münster and Potsdam, standard listings have fallen by 50 to 55% compared with 2015. In Q1 2026 alone, standard listings fell a further 0.6% quarter-on-quarter.
Against this, the furnished open-ended rental segment has grown explosively. In Germany's eight largest cities, such listings rose from around 7,500 in 2015 to approximately 23,000 in 2025, an increase of more than 200%. Across all 37 GREIX cities, the segment grew from around 12,000 to 37,000 listings over the same period.
"Since 2015, regular listings have fallen by more than a fifth, while long-term furnished offers in metropolitan areas have nearly tripled," said Zdrzalek. "Anyone looking for an apartment today in a major city via common platforms is increasingly encountering conditions that were still an exception ten years ago."
The shift towards furnished rentals has drawn political attention. Federal Justice Minister Stefanie Hubig (SPD) is proposing to cap temporary furnished tenancies at a maximum of six months and to limit furnishing surcharges to 5% of the net basic rent. The Ifo Institute has cautioned against overstating the phenomenon, however, estimating furnished apartments let on a fixed-term basis at no more than 0.8% of the total German market.
For institutional investors in German residential real estate, the Q1 2026 data resists easy conclusions. The cyclical deceleration in rent growth is real, affordability constraints are biting, and the steady erosion of standard rental supply raises questions about the long-term structure of the market as much as it supports the investment case. Empirica's forecast of returning new-build profitability offers some encouragement, but in a market as politically contested and supply-constrained as Germany's, the path from data to investment return remains anything but straightforward.