Housing Market Overview H1 2025

Developments on the Demand and Supply Side

Berlin's housing market is experiencing significant demographic and construction-related changes that require careful analysis. As of December 31, 2024, Berlin's population reached 3,897,145 inhabitants, representing moderate growth of +0.5 percent (+19,045 people) compared to the previous year. International immigration is the primary driver of population growth, highlighting the continued importance of immigration for the city's demographic development. The positive balance of migration effectively offsets the natural population decline, as more people continue to die than are born in Berlin. This is evident from the reduction in the number of children under six years old from 215,179 in 2023 to 208,938 in 2024.

Regarding housing supply, Berlin building authorities reported 15,362 completed housing units in 2024, representing a decline of 3.8 percent compared to the previous year. These completions resulted from 2,533 construction projects (+5.0 percent). The number of housing units created through new construction remained stable at 14,632 units. The decline in building permits shows a particularly clear trend, which is relevant for future housing supply. In 2024, Berlin authorities granted permits for 9,772 housing units. This is a reduction of -38.5percent compared to 2023 and continues an eight-year continuous decline in permit issuance. Of these, 8,558 units are planned for new residential and non-residential buildings, representing a decrease of 40.6percent compared to the previous year. Compared to the other Big-8 cities, Berlin demonstrates above-average construction activity with 40 completions per 10,000 inhabitants. However, JLL's needs analysis in the medium scenario shows an undersupply of about 20 housing units. Given Berlin's market size and dynamics, this represents a significant challenge. The considerable discrepancy between current building permit numbers (25 per 10,000 inhabitants) and completion rates indicates a potential future decline in construction activity.

Rent and Purchase Price Development

Berlin's real estate market shows a balanced picture of moderate growth and solid fundamentals. Quality-adjusted data on new rental contracts show that Berlin experienced moderate growth in the first half of 2025. The overall stock increased by 1.0 percent year-on-year, with existing properties rising by around 1.5 percent and the new construction segment experiencing a slight increase of 0.1 percent. In a 5-year comparison, Berlin remains at the top among the Big-8 cities, which suggests a pause after years of strong dynamics.

In the condominium market, Berlin shows a slightly improved situation, with median prices offered at €5,642/sqm for the overall stock. This is supported by a medium five-year growth of 4.9 percent, despite an annual increase of just 0.1 percent. The existing segment achieved €5,434/sqm, with medium 5-year growth of 6.2 percent and development from the previous year's value of 0.3 percent. Prices for new constructions decreased slightly by 2.6 percent in the first half of the year, reaching €7,721/sqm.

Berlin represents a market for investors seeking sustainable returns with proven long-term appreciation potential. It has successfully navigated the transition from rapid growth to value preservation, maintaining its position as one of Germany's leading real estate destinations.

Developments on the Demand and Supply Side

Cologne's population reached 1,090,473 inhabitants at the end of 2024, representing moderate growth of +1,509 people (+0.1percent) compared to the previous year. Net migration is a decisive factor for population development in Cologne. In 2024, the city recorded 59,244 arrivals compared to 56,426 departures, resulting in a positive migration balance of 2,818 people. This immigration compensated for the natural population decline of 1,340 people. Regarding housing supply, Cologne experienced a significant reduction in housing construction activity in 2024 with only 1,819 completed housing units. This is the lowest number since 1990 and almost 50percent below the level of 2023 (3,533 units). Of these completions, about 64 percent of the completed units had received their building permits more than two years before completion, while only 3.3 percent were completed within one year of permit issuance and about 33percent within one to two years. Similar trends are evident in building permit activity: In 2024, 2,931 permits were issued, representing a decline of 8.7 percent compared to 2023. In the comparative analysis of the eight largest cities in Germany, Cologne has the lowest construction activity with only 16 completions per 10,000 inhabitants. This below-average construction activity manifests itself in a substantial supply gap of 29 units per 10,000 inhabitants in the JLL needs analysis. Although building permits with 24 units per 10,000 inhabitants exceed current completion rates, they remain insufficient to meet the additional housing needs in the cathedral city. The considerable discrepancy between housing demand and completions in the forecast underscores the urgency of enhanced housing policy measures.

Rent and Purchase Price Development

In the first half of 2025, the Cologne residential real estate market showed steady growth in both the rental and purchase segments. Rents for the overall property stock averaged €16.27/sqm in the first half of 2025, corresponding to a five-year average growth rate of 4.7 percent. Rents for existing properties are €16.00/sqm, whereas rents for new buildings are €21.02/sqm. The rental market recorded constant annual growth of 8.5 percent for the overall stock, with new rental properties showing particularly high growth of 17.6 percent.

In the purchase segment, prices for the overall condominium stock in Cologne increased slightly by 2.5 percent compared to the previous year, reaching a median of €4,936/sqm in the first half of 2025. The market shows a medium five-year CAGR of 4.5 percent. Existing units are offered at €4,719/sqm, while new buildings achieve a significant premium of 46 percent at €6,871/sqm. The condominium market in new constructions in Cologne has developed dynamically in recent years, with a five-year CAGR of 6.7 percent. However, the most recent development, with annual growth of -0.3 percent, indicates a continuing sideways movement of the market.

The city successfully balances affordability with steady value appreciation, establishing itself as a compelling alternative to higher-priced German markets.

Developments on the Demand and Supply Side

The demographic statistics for 2024 reveal a slight negative population development for Stuttgart: The state capitol records a total decline of 735 inhabitants. This decline results from two factors: negative natural population development with a deficit of 276 people and a net migration deficit of 459 people. This development, however, reflects Stuttgart’s declining attractiveness and more the consequences of an unsuccessful expansion of the housing supply.

The construction activity data for Stuttgart in 2024 shows a significant decline across almost all areas. With only 559 total construction projects, the year 2024 is substantially below the level of previous years. The number of completed housing units decreased to 1,321, which is 30 percent below the previous year's value (1,891 units in 2023). In historical context, construction activity in 2024 falls far below the peak of the early 1990s, when in 1993 alone 3,586 housing units were completed.

Consequently, construction activity in Stuttgart is below average compared to the other eight largest German cities: Only 22 apartments per 10,000 inhabitants are completed. This remains significantly behind demand. JLL's needs analysis reveals a supply deficit of 40 units per 10,000 inhabitants regarding future additional demand. Particularly striking is the low building permit rate of 12 per 10,000 inhabitants, the lowest among the cities compared. This indicates a potential further deterioration of housing market conditions. Unlike in Munich or Düsseldorf, where the number of building permits exceeds completions, Stuttgart lacks the prerequisites for short-term relief of the housing market. Despite the slight population decline, this further exacerbates the existing housing shortage.

Rent and Purchase Price Development

In the first half of 2025, Stuttgart experienced moderate rent growth, with median rents for both existing and newly constructed properties increasing by 4.8 percent to €12.25 per square metre compared to the previous year. This puts Stuttgart at the lower end of the range for new rental contracts compared to the other eight largest German cities. The rental market shows clear differentiation between segments, with rents for new constructions exhibiting greater dynamism. Rental offers for new-build properties, currently averaging €19.57/sqm, recorded significant year-on-year growth of +7.1 percent, while existing apartments showed a more moderate increase of +4.2 percent. The latter averaged €16.67/sqm in the first half of the year. This development reflects the very weak supply in Stuttgart.

After a period of slight decline, prices for condominiums have now stabilised in the first half of 2025. The overall average price is €4,676/sqm, representing a minimal 0.2 percent increase when considering the quality differences within the analysed data. The existing apartment segment shows a slightly higher increase of 0.4 percent compared to last year's value, with prices at €4,571/sqm. Offer prices in the new construction segment are significantly higher, averaging €8,376/sqm.

Overall Market Development

Analysis of rental price trends in Germany's eight largest cities indicates a slowdown in growth. On average, total rents increased by 4.9 percent (compared to 8.1 percent the previous year). There are significant regional differences: The strongest increases were recorded in Hamburg (+13.7percent), Leipzig (+11.4percent) and Düsseldorf (+8.3percent), while Berlin showed sideways movement at +1.0percent. Over a five-year period, Berlin leads with an increase of 49.9 percent, followed by Leipzig with 46.8 percent and Hamburg with 36.8 percent. Munich has the highest absolute rent level at 23.33 Euros per square metre, while Leipzig has less than half this value at 10.45 euros per square metre.

Prime Segment

The average increase in premium rents was 4.7 percent, with significant regional variations. The strongest increases were recorded in Leipzig (32.0 percent) and Hamburg (15.0 percent). Munich remains the most expensive city, with average rents of €36.05 per square metre, more than twice the price of Leipzig, where average rents are €15.93 per square metre. The five-year review reveals a process of convergence, which is particularly evident in Leipzig (+56.9 percent) and Berlin (+40.2 percent).

Existing Apartment Rents

Year-on-year, existing apartment rents increased by 6.8 percent, which is stronger than the overall market but weaker than last year's figure of +8.2 percent. The highest dynamics were seen in Hamburg (+10.6 percent) and Leipzig (+10.2 percent), while Berlin, despite an overall development of +56.1 percent over the last five years, currently records only a +1.5 percent increase. Munich leads with €23.86/sqm and a year-on-year increase of 6.4 percent.

New Construction Rents

Rents for new constructions increased by 3.3 percent, which represents a significant slowdown compared to the previous year (10.3 percent). The strongest increases were seen in Hamburg (+18.1 percent), Cologne (+17.6 percent) and Düsseldorf (+17.2 percent), while Berlin (+0.1 percent) stagnated. In some cases, the quality-adjusted values are significantly below the median, indicating structural changes in the supply mix. The five-year increase in new construction rents (+32.3 percent) exceeds that in existing apartment rents (+26.7 percent), suggesting mounting affordability issues. Persistent demand pressure is primarily manifested in the existing apartment segment.

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