Housing Prices Surge Again in Major German Cities as Rents and Construction Challenges Persist

Property prices across major German cities rose by an average of 4.6 percent, with Munich, Düsseldorf, Hamburg, and Cologne all experiencing increases of more than 5 percent, according to data from the Association of German Pfandbrief Banks, which represents the country’s leading mortgage institutions.

Rental costs also climbed, with rents for new leases in apartment buildings rising by 3.7 percent nationwide and 3.8 percent in large cities. Düsseldorf and Frankfurt recorded the sharpest rent increases, averaging around 5 percent.

The ongoing housing shortage in Germany’s major urban centers is expected to persist for several years, despite government initiatives aimed at accelerating building permit approvals. Association chief executive Jens Tolckmitt said that while the government’s plans to boost housing construction are positive, their success depends on how effectively local authorities implement them.

He highlighted proposals such as offering 80 percent state guarantees for real estate loans to encourage large-scale construction projects and address the supply gap.

The association has been publishing real estate data based on transactions from over 700 banks since 2010. After several years of rapid growth, property prices in Germany have moderated from their 2022 peak, when rising interest rates significantly increased borrowing costs and slowed market demand.