As 2024 came to a close, the cost of renting in Germany rose while purchase prices remained stable. Here’s which cities saw the biggest rent increases:

Rents continue to rise in Germany

Figures published by the German Institute for Economic Research in Cologne (IW) have revealed that average prices on the German rental market increased by 4,7 percent in the final quarter of 2024 compared to the same period the previous year.

The most significant rises were seen in Berlin (8,5 percent), Essen (8,2 percent) and Frankfurt (8,0 percent). Leipzig and Düsseldorf also recorded above-average rises, with 7,3 percent and 7,2 percent, respectively.

Rental costs have been rising consistently and sharply in Germany, especially in the years since the coronavirus pandemic outbreak. Another recent study by the IW found that In 1991, just 5 percent of households in Germany were spending 40 percent or more of their income on rent. This figure has now risen to 14 percent. 

Tenants in Germany who spend more than 30 percent of their income on rent - an internationally recognised guideline for affordable housing - are considered “overburdened”.

Meanwhile, the average cost of buying a house in Germany remained stable in the final quarter of 2024, even dipping 0,4 percent below prices in the same period of the previous year. However, the cost of buying a single or two-bedroom house rose slightly, by 0,6 percent.

But doesn’t Germany have a rent brake?

While the CDU-led grand coalition introduced a nationwide rent brake law (Mietpreisbremse) in 2015 and the traffic-light government led by Olaf Scholz extended the Mietpreisbremse to 2029, critics argue the law is too flimsy.

At the moment tenants who live in newly-built properties rented for the first time after 2014, modernised properties, properties rented for less than a year, properties where the rental contract was signed before the law took effect and those previously rented at an illegally high price, are not protected. Only a restricted pool of tenants benefit from the law in its current form.

Amid the country’s worst housing shortage in 20 years, Germany is also not meeting its housing construction targets. While the federal government estimates that 400.000 new houses must be built per year to meet needs, the IW found that just 260.000 new houses were built in 2024 and between 150.000 and 200.000 are expected to be finished in 2025.

Given that the current Mietpriesbremse law is more skewed to protecting long-term tenants, even if construction targets were met, more new builds would not automatically bring down average rents.

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