Housing Market Overview - H2 2025

Rent and Purchase Price Development

In the second half of 2025, Berlin recorded the weakest growth in median rents for new contracts (for both existing apartments and newly built properties) at +0.2 percent. However, when adjusted for quality characteristics that control for property influence and differences in micro-location, growth improved to +3.8 percent. The market showed pronounced distributional divergence: prime rents (90th percentile) declined by -2.3 percent, following an earlier fall of -4.7 percent. Conversely, rents in the lowest 10 percent category increased by +13.1 percent to an average of €11.43 per square metre. The rental housing market in Berlin shows the greatest discrepancy in rental price development across the distribution of all Germany's Big-8 cities. While rents for existing properties rose by +1.8 percent due to stable demand, rents for newly built apartments fell by -4.4 percent, highlighting price sensitivity in the prime segment.

In the condominium market, Berlin recorded slight annual growth of 0.6 percent in the second half of 2025, reaching an average price per square metre of €5,647. Over a five-year period, total condominium prices in Berlin increased by +13.4 percent, surpassing those in Hamburg (+7.7 percent) and Cologne (+12.6 percent). Asking prices for existing apartments increased by +1.6 percent annually to €5,447/sqm. By contrast, the new construction segment recorded an annual price decline of -0.7 percent to €7,724/sqm, despite a robust five-year increase of +23.6 percent. Berlin's residential real estate market remains one of the most dynamic in Germany, supported by strong long-term rental growth and robust demand for both established properties and those offering better quality. While annual price movements are currently moderate, divergent trends in individual segments highlight ongoing structural changes and affordability issues. Regulatory measures, supply shortages and demographic developments continue to shape Berlin's distinctive market landscape.

Developments on the Demand and Supply Side

While demand for housing continues to rise, supply is declining. Berlin's building authorities reported a total of 15,362 completed residential units for 2024, representing a decrease of 3.8 per cent compared to the previous year. These completions resulted from 2,533 construction projects (+5.0 percent), with 14,632 units realised through new construction, remaining at the previous year's level. For building permits, Berlin authorities recorded a significant decline to 9,772 residential units (-38.5 percent) in 2024, continuing an eight-year downward trend. Of these, 8,558 units are attributed to new residential and non-residential buildings (-40.6 percent).

Compared to the eight largest cities, Berlin achieved above-average results with 40 completions per 10,000 inhabitants. Nevertheless, JLL's demand analysis identifies a shortage of approximately 20 residential units in the medium scenario. The building permit rate of 25 per 10,000 inhabitants is significantly below the completion rate.

Rent and Purchase Price Development

In the second half of 2025, Hamburg's housing market was highly dynamic, recording the highest rental growth of Germany's eight largest cities. The average median rent for existing and newly constructed apartments combined reached €18.12/sqm, recording an impressive annual increase of +9.0 percent. A quality-adjusted analysis confirmed this trend, showing a +7.9 percent increase in rents compared to the previous year, which highlights the robust demand across all segments. Prime rents (the top 10 per cent of rental offers) increased by +8.7 percent to €28.70/sqm, while new contract rents for existing apartments rose by +8.84 per cent. However, growth rates remained slightly below the historically high values of the previous year. Rents for newly built apartments performed particularly well, rising by +12.4 per cent year-on-year and achieving impressive growth of +57.7 percent over five years — the highest among all major cities.

On the buyer side, prices for condominiums remained stable. The average price of all properties sold was €6,201/sqm, representing annual growth of +2.0 percent. The premium segment recorded strong growth of 8.4percent, recovering significantly from +1.1 percent the previous year. The average price of existing apartments reached €5,614/sqm in the second half of 2025. This trend is supported by quality-adjusted growth of +3.2 percent, following a decline in the previous year. Meanwhile, prices for new-build apartments increased to €8,946/sqm, recording annual growth of +6.4 percent and the highest compound annual growth rate (CAGR) of +8.3 percent among comparison cities over the past five years. Hamburg is characterised by robust growth in both the rental and residential segments. This continued dynamism is driven by sustained demand, consistent new construction activity and an attractive urban environment.

Developments on the Demand and Supply Side

In 2024, Hamburg recorded a significant increase in residential construction activity: 8,319 new residential units were completed, representing an increase of 39 percent compared to 2023. Multi-storey residential buildings had the largest share with 6,334 units (78.5 percent), followed by residential complexes with 862 units (10.7 percent), single and two-family houses with 704 units (8.7 percent), and non-residential buildings with 165 units (2.0 percent).

The number of building permits issued, however, declined: with 4,617 permits, a decrease of -12.2 percent compared to the previous year was recorded. With 42 completions per 10,000 inhabitants, Hamburg achieved above-average values in the Big 8 comparison. JLL's analysis reveals a moderate undersupply of around four residential units per 10,000 inhabitants. The building permit rate of 24 per 10,000 inhabitants is significantly below the completion rate.

Rent and Purchase Price Development

In the second half of 2025, Munich's housing market maintained its position as the most expensive location for rents and homeownership among Germany's eight largest cities. The median rent for new contracts was €24.65/sqm, around +36 percent higher than the average for the eight largest cities, which was €18.17/sqm. This confirms the city's premium status. Annual rental growth accelerated to +5.7 percent, up from +3.7 percent the previous year. The prime rental segment remained robust, with prime rents reaching €36.10/sqm, an increase of +4.2 percent compared to the previous year. These remained stable compared to the first half of 2025. Meanwhile, rents for existing properties rose by +5.2 percent to €24.41/sqm, while rents for new constructions stood at €26.44/sqm. The latter were supported by a compound annual growth rate of +3.5 percent over five years.

In the condominium sector, Munich continues to set nationwide benchmarks. Median prices for the entire stock reached €8,667/sqm, marking a +2.9 percent increase following a decline the previous year. Quality-adjusted prices rose by +3.0 percent, thus following the trend of median prices. The median price for existing properties of €8,275/sqm recorded annual growth of 4.1percent, while prices for newly constructed apartments of €11,291/sqm showed a compound annual growth rate of 4.8percent over the past five years. These trends are driven by sustained demand, limited supply and robust demographic dynamics, ensuring stable market prospects and ongoing opportunities for investors and developers.

Developments on the Demand and Supply Side

In Munich, significantly fewer apartments were completed in 2024: 6,503 new residential units in residential and non-residential buildings correspond to a decline of around -34 percent compared to 2023, when 9,857 units were built. Building permit activity also declined: with 8,329 approved residential units, there was a decrease of -8.4 percent compared to the previous year. This continues the downward trend in permits observed since 2017. At that time, authorities approved around 13,500 new apartments.

In comparison with Germany's eight largest cities, Munich achieved above-average construction activity with 41 completions per 10,000 inhabitants. However, JLL's demand analysis shows a significant supply deficit of 20 apartments per 10,000 inhabitants. A positive indicator is building permits: with 52 permits per 10,000 inhabitants, Munich has the highest rate among the eight largest cities, which is significantly above the completion rate.

Rent and Purchase Price Development

In the second half of 2025, asking rents in Cologne recorded strong growth, with median rents rising from €15.58/sqm to €16.39/sqm. Annual growth increased from +3.3 percent to +5.8 percent. The isolated market trend, quality-adjusted rental growth, was even stronger at +7.1 percent compared to +5.9 percent in the previous year. The market showed pronounced distributional effects: while growth in prime rents (90th percentile) weakened from +5.2 percent to +4.2 percent, the minimum rent segment (10th percentile) increased by +9.8 percent — a clear acceleration compared to +2.1 percent the previous year. Rents for existing properties reached €16.10/sqm, representing growth of +5.3 percent; however, this represents a slowdown compared to the exceptional growth of +10.5 percent previously recorded. Rents for new constructions reached €19.01/sqm, supported by the highest five-year CAGR of +8.3 percent among the eight largest cities, reflecting strong demand for high-quality residential properties.

Cologne's condominium market showed clear signs of recovery. Median prices for existing and new-build apartments reached an average of €5,000/sqm in the second half of 2025, marking an improvement on the previous figure of +2.4 percent with annual growth of +3.7 percent. Prices in the premium segment increased by +3.0 percent to €7,460/sqm, marking a notable turnaround from the previous year's decline of -6.0 percent. The average price for existing properties was €4,800/sqm, which is a significant increase on the previous year's figure of +1.4 percent. Prices for new-build apartments recovered with growth of +4.1 percent, thus recovering from a strong decline of -9.3 percent previously.

Cologne's housing market shows strengthening fundamentals in both the rental and ownership segments, making the city increasingly attractive as an investment location

Developments on the Demand and Supply Side

Cologne recorded a drastic collapse in residential construction activity in 2024: with 1,819 completed residential units, the lowest level since 1990 was recorded. This corresponds to a decline of almost -50 percent compared to 2023, when 3,533 units were completed. Of the completed residential units, around 64 percent had received their building permits more than two years previously, whilst only 3.3 percent were completed within one year of approval and around 33 percent within one to two years. The number of building permits issued also declined: with 2,931 permits, it was -8.7 percent below the 2023 figure.

Compared to the other Big-8 cities, Cologne has the lowest construction activity with only 16 completions per 10,000 inhabitants. JLL's demand analysis revealed a significant supply gap of 29 units per 10,000 inhabitants. The building permit rate of 24 units per 10,000 inhabitants is above the current completion rate.

Rent and Purchase Price Development

In the second half of 2025, the rental market in Frankfurt remained robust. Median rents reached €19.06 per square metre and recorded annual growth of 5.8 per cent. This establishes the city as one of Germany's leading rental markets. Prime rents (90th percentile) increased to €28.80/sqm, growing by 4.1 percent compared to 3.7 percent in the previous year. This demonstrates sustained demand in the upper rental price segment too. Quality-adjusted rental growth strengthened significantly, increasing from +3.5 percent in the previous year to +7.6 percent, which indicates broad-based market dynamics beyond the compositional effects of offerings. Rents for existing apartments increased to €18.59/sqm and recorded annual growth of +6.2 percent. However, this represents a weakening compared to the previously recorded value of +9.0 percent. In contrast, rents for newly constructed apartments, at €20.90/sqm, declined by -6.2 percent compared to the previous year. This reflects price sensitivity in this segment.

The condominium market in Frankfurt continues to see sideways movement: total median prices fell by -2.3 percent to €6,217/sqm, having previously risen by +1.9 percent. Nevertheless, Frankfurt remains the second most expensive city among Germany's Big-8 cities after Munich for residential ownership. Prices for condominiums reached €9,399/sqm in the premium segment (the top ten percent of purchase offers). Quality-adjusted growth was less pronounced, declining by -0.2 percent compared to the previous year, and thus supporting the trend of sideways movement towards slight recovery. Prices for existing apartments rose by +3.5 percent to €5,923/sqm and thus developed positively year-on-year again after declining in the previous year. However, the new construction apartment segment shrank by -4.6 percent after recording growth of +5.0 percent in the previous year.

Developments on the Demand and Supply Side

Frankfurt forms an exception to regional and national construction trends: with 4,203 completed residential units in 2024, the third-highest annual completion figure of the last decade was achieved. The conversion of commercial properties contributed significantly to this. 630 residential units were created through conversion, representing an increase of 37 percent compared to the previous year. The number of building permits issued for residential units, however, showed a declining trend: 2,266 permits were issued, representing a decrease of -30 percent.

In comparison with the other Big-8 cities, Frankfurt achieved the highest construction activity in 2024 with 55 completed residential units per 10,000 inhabitants. However, JLL's demand analysis still identifies a significant supply gap of 27 residential units per 10,000 inhabitants. This is due to exceptionally high additional demand of around 82 residential units per 10,000 inhabitants – the second-highest value among the analysed cities after Leipzig. At 29 per 10,000 inhabitants, the building permit rate is significantly below the completion rate. This distinguishes Frankfurt from cities like Munich or Dusseldorf, which show higher permit rates.

Rent and Purchase Price Development

In the second half of 2025, Dusseldorf's rental market saw strong growth. New rental prices increased to an average of €15.48/sqm, representing a +6.7 percent rise compared to the previous year. This figure also surpassed the compound annual growth rate (CAGR) of +4.7 percent observed over a five-year period. Quality-adjusted rental growth strengthened from +6.2 percent to +7.7 percent, indicating a robust market trend regardless of the supply characteristics considered. Prime rents (90th percentile) reached €24.10/sqm, rising by +5.3 percent. Meanwhile, the median asking rent for existing apartments remained stable at €15.00/sqm in the second half of the year, compared to the first half of 2025, and benefited from strong average growth of +29.8 percent over five years. Rents for new constructions increased by +16.2 percent year on year to €21.25 per square metre, which was a significant acceleration compared to the previous rate of only +1.8 percent. The minimum rent segment (10th percentile) recovered strongly, growing by +8.2 percent and reversing the previous year's decline of -4.3 percent.

Dusseldorf's condominium market also experienced a turnaround, with median purchase prices reaching €4,849/sqm — an annual increase of +5.3 percent. This represents a significant recovery compared to the previous decline of -4.8 percent. Prime purchase prices (90th percentile) increased by +2.6 percent to €7,922/sqm. Prices for existing apartments stood at €4,654 per square metre, recording solid growth of +5.0 percent after declining by -4.2 percent the previous year. Quality-adjusted growth reached +6.0 percent in the second half of 2025, showing that the pure market trend is slightly higher. Prices for new construction remained stable at €7,593/sqm and recorded a compound annual growth rate of +3.9 percent over a five-year period. Dusseldorf's residential property market is recovering steadily, positioning the city for sustained growth.

Developments on the Demand and Supply Side

In 2024, 1,990 new residential units in residential and non-residential buildings were completed in Dusseldorf. This corresponds to a decline of +3.5 percent compared to the previous year. The number of building permits, however, developed very positively: with 2,737 approved residential units, this figure rose by +21.6 percent compared to the previous year. This is viewed as a positive indicator for future housing supply.

With 30 completions per 10,000 inhabitants, Dusseldorf is in the middle field of Germany's eight largest cities. Particularly noteworthy is the positive difference between completions and building permits. The building permit rate stands at 42 per 10,000 inhabitants and is thus significantly above the completion rate. This is the highest positive difference among the compared cities. According to JLL's demand analysis, the supply deficit amounts to ten units per 10,000 inhabitants. This could be reduced in the medium term if the approved projects are successfully implemented.

Rent and Purchase Price Development

In the second half of 2025, the Stuttgart housing market recorded moderate rent growth. The median new contract rent for existing and newly constructed apartments was €17.07 per square metre, representing an annual growth rate of +3.5 percent. This places Stuttgart at the lower end of the eight largest German cities in terms of market dynamics. Prime rents (90th percentile) remained stable at €25.00 per square metre compared to the first half of 2025, indicating equilibrium in the luxury segment. Rents for existing apartments averaged €16.95/sqm in the second half of 2025, with annual growth weakening slightly from +4.0 percent to +3.8 percent. The strongest increases were recorded in the new construction apartment sector, with robust annual growth of +14.3 percent, which saw a significant recovery from the previous year's decline of -2.2 percent.

Stuttgart's condominium market showed signs of stabilisation, with the total median asking purchase price averaging €4,591/sqm — a fall of -1.8 percent compared to the first half of 2025. However, this represents an improvement on the previously recorded decline of -3.0 percent. The quality-adjusted trend, i.e. the trend exclusively attributable to market development, also confirms this. It showed annual growth of +0.8 percent, indicating fundamental market consolidation. Prices for existing apartments increased by +1.2 percent to €4,505 per square metre. Newly built apartments were sold at an average price of €8,169/sqm. Thus, Stuttgart consolidated its third-place ranking among the eight largest cities in terms of prices for premium properties.

Developments on the Demand and Supply Side

In 2024, Stuttgart recorded a significant decline in construction activity: a total of only 559 construction projects were registered. The number of completed residential units fell to 1,321 and was thus 30 percent below the previous year's figure of 1,891. In historical comparison, construction activity remains far behind former peaks: in 1993, for example, 3,586 residential units were completed.

In comparison with Germany's eight largest cities (Big 8), Stuttgart shows below-average construction activity with 22 completed apartments per 10,000 inhabitants. JLL's demand analysis determines a supply deficit of 40 units per 10,000 inhabitants. With only 12 building permits per 10,000 inhabitants, the building permit rate is particularly low – the lowest among the compared cities. Unlike Munich or Dusseldorf, where the number of building permits exceeds the number of completions, Stuttgart lacks the prerequisites for short-term relief of the housing market.

Rent and Purchase Price Development

Leipzig remains the most affordable rental market among Germany's eight largest cities, but is also the market with the highest growth dynamics. In the second half of 2025, new contract rents for existing and newly constructed apartments reached an average of €11.00/sqm, which is a +5.4 percent increase compared to the previous year. While dynamics remained above those of the other seven largest cities, they were significantly below the median five-year development, which at +7.6 percent is the highest among them. Prime rents (90th percentile) reached €15.80/sqm, showing robust annual growth of +7.7 percent, as well as strong demand across all market segments. Asking rents for existing apartments stood at €10.58 per square metre in the second half of 2025, recording annual growth of +5.8 percent. This represents a slowdown compared to the exceptional growth of +12.7 percent in the previous year. Conversely, rental growth for newly built apartments accelerated from +5.8 percent to +8.7 percent. The average here stands at €14.94/sqm at year-end. The combination of affordability and convergence tendencies continues to attract tenants and investors seeking good value for money to Leipzig.

Remarkable dynamics were observed in Leipzig's purchase market, with total prices reaching €2,180/sqm and recording annual growth of 6percent. Consequently, Leipzig achieved the highest five-year CAGR of +6.5 percent among Germany's eight largest cities. Prices for existing apartments rose to €2,895/sqm with an increase of +1.3 percent. This represents a decline compared to the previously recorded growth of +3.6 percent. However, quality-adjusted prices for existing apartments increased significantly by +4.7 percent, confirming the trend of accelerated price growth. Meanwhile, prices for new construction apartments remained stagnant, with zero percent growth. Leipzig uniquely combines exceptional long-term growth with Germany's most affordable prices and thus remains attractive to investors across all residential segments.

Developments on the Demand and Supply Side

In 2024, Leipzig recorded a slight increase in construction activity: 2,771 residential units were completed, representing an increase of 8.4 percent compared to 2,557 units in 2023. Historically, construction activity is significantly above the level of the past two decades, when the focus was primarily on reducing vacancy rates rather than new construction of apartments.

With 44 completions per 10,000 inhabitants, Leipzig is above average compared to Germany's eight largest cities. However, JLL's demand analysis revealed a supply deficit of 38 units per 10,000 inhabitants. Thus, Leipzig has the largest absolute supply gap among all examined cities. The number of building permits at 28 per 10,000 inhabitants is below the current completion level. From 2023 to 2024, the number of permits fell by 22.5 percent. Unlike cities such as Munich or Dusseldorf, the discrepancy between permits and completions remains high in Leipzig.

Despite some signs of recovery in residential construction, 2025 saw a further increase in excess demand in Germany's largest metropolitan areas.

In 2024, construction activity reached a preliminary low point, with just 251,900 apartments completed. This is the lowest figure since 2015. For 2025, only 220,000–230,000 completions are expected across Germany as a whole. This exacerbates the existing housing shortage.

In regional markets that have exhibited high rental dynamics over the past decade, the discrepancy between existing and new contract rents has widened further. This discrepancy leads to a so-called lock-in effect: the mobility rate has declined significantly in recent years as households cannot afford the substantially higher costs of moving home, even when their housing needs have changed. This development creates inefficiencies in rental housing markets. The reduced turnover of vacated apartments also exacerbates the shortage of supply, as the limited supply cannot be distributed as efficiently to meet existing demand. This creates persistent supply shortages with market implications. This further intensifies the scarcity in the rental housing market.

However, 2025 showed initial signs of a turnaround in residential construction; from January to November, the number of building permits increased by 13.7 per cent compared to the same period the previous year. It should be emphasised that the increase in single-family houses accounted for a large proportion of this (+17.0percent).

In response to this development, the 'Construction Turbo Act' was passed in October 2025. The aim was to accelerate lengthy planning procedures and give municipalities and developers more scope for action. The new regulation (§ 246e, para. 1 BauGB) allows for deviations from existing building planning law, among other things. This mechanism is primarily intended for use in inner-city areas to enable the flexible and rapid creation of new housing.

The number of completions is expected to decline further in 2026. Despite the expected positive growth rates in residential construction, the effects on completions in multi-storey residential construction will only become apparent several years later. The lowest number of completions is expected in 2026, meaning the gap between construction performance and demand will remain significant that year.

The weighted average of the median asking rent in the eight largest cities, including both existing and newly constructed apartments, reached €18.17 per square metre in the second half of 2025. This corresponds to annual growth of +4.4 percent. Compared to the previous year, however, there was a clear weakening of market dynamics, as growth in new contract rents had been +7.7 percent at the same time the previous year.

In cities outside the eight largest cities, total rents increased more slowly. With an average asking rent of €11.25 per square metre in the second half of 2025, these markets recorded annual growth of around +3.4 percent, which was also slightly below the previous year's growth of +3.9 percent. However, asking rents in rural districts showed more dynamic development, reaching an average of €9.61 per square metre — an increase of +4.4 percent compared to the previous year. Compared to the previous year, when growth was at +2.9 percent, development in rural districts accelerated.

The flattened dynamics of total rents were primarily driven by the development of new construction rents.

Existing and New Construction Segments

In the second half of 2025, the average rent for existing apartments offered for rent in Germany's eight largest cities reached €17.57 per square metre. This represents a +5.1 percent increase compared to the previous year. This indicates restrained growth, given that development in the previous year had been at +7.4 percent. In regional terms, Hamburg leads with growth of +8.8 percent, although a weakening compared to the previous year's figure of +11.6 percent is also evident here. Leipzig shows particularly strong volatility, with growth of +5.8 percent this year, following an exceptional +12.7 percent last year. Cologne recorded growth of 5.3 percent, down from 10.5 percent the previous year, which also signals a significant slowdown in rental price development in the existing segment.

The average new construction rent in the eight largest cities was €21.92 per square metre in the second half of 2025, which was around +0.7 percent above the previous year's value. This represents a significant slowdown. In the previous year, median new construction rents still increased by 7.4 percent. The median development of new construction rents in the eight largest cities was significantly influenced by developments in Berlin. Berlin recorded a quality-adjusted correction of -1.5 percent (median rent development of -4.4 percent). This distorts developments in the remaining Big-8 cities, where both the median and quality-adjusted corrections show clear growth. Significant rent increases were particularly evident in Dusseldorf (+9.7 percent), Hamburg (+7.6 percent) and Munich (+6.6 percent).

The condominium market recovered noticeably in 2025, after rental and purchase costs once again approached equilibrium. Although renting remains more advantageous in many regions, several converging factors led to this positive development: a correction in property prices, lower capital costs than in previous years, and a significant increase in rental prices. The residential ownership market gained additional momentum from the limited availability of rental properties, which caused shifts in demand. This development is also reflected in accelerated sales velocity.

In the Big-8 cities, the average purchase price was €5,527 per square metre, corresponding to annual growth of +1.7 percent. Thus, condominium prices have continued to rise slightly, following a decline of -0.7 percent compared to the previous year.

Existing and New Construction Segments

This development was primarily driven by changes in the prices of existing apartments on the market. In the second half of the year, purchase prices rose by around +3.1 percent compared to the previous year's median value. Thus, the market recovered significantly after prices fell by -0.5 percent in the previous year. Munich has the highest price level in the existing apartment segment at €8,275 per square metre, followed by Frankfurt at €5,923 and Hamburg at €5,614.

While prices in the existing segment have fallen more sharply in recent years than in the new construction segment, where prices are less flexible due to being tied to production costs, the opposite picture is emerging at the beginning of the upturn phase: prices in the existing segment are developing more dynamically, while new construction prices are moving sideways. On average across the eight largest cities, prices in the new construction segment have risen by +0.2 percent compared to the previous year.

This is also reflected in the development of sales velocity. The average marketing duration of existing apartments decreased by around -12.4 percent in 2025 compared to the previous year, while the decrease for new construction apartments was significantly lower at -4.9 percent. The average marketing duration illustrates the differences in marketability: existing apartments must be marketed for around 13 weeks on average, whereas new-build apartments take around 23 weeks.

Authors
Dr. Sören Gröbel, Director of Living Research, Germany
Alwina Fatima, Senior Research Analyst

Contact:
Our Residential Market contacts:

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Michael Bender, Head of Residential Germany

Valuation:
Roman Heidrich, Lead Director Value and Risk Advisory, Berlin

Research:
Helge Scheunemann, Head of Research Germany
Dr. Sören Gröbel, Director of Living Research, Germany

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