After a period of moderate growth, rents are once again rising sharply in Germany. The rent rise trend is passing beyond the borders of large German cities and spreading to areas which, until now, have been more affordable. These are the federal states and cities which are particularly impacted.

Rental costs rising in Germany

The cost of renting in Germany is now rising exponentially, with rises reaching across each corner of the country. According to data from the Institute for Economic Research based in Cologne, in the third quarter of 2022 the cost of renting in Germany climbed by 5,8 percent in comparison to the same quarter in 2021.

The 5,8 percent rise is higher than any third-quarter average for the last three years. Across all federal states in Germany the rise was above the average trend. The assessment is based on a comparison of 1,5 million rental advertisements on leading housing websites.

Mecklenburg-Vorpommern sees significant rent rises

As inflation continues to rise, landlords are charging higher rents, and the demand for rented housing remains high in Germany. In the federal state of Mecklenburg-Vorpommern, which lies on the Baltic coast, renters have been hit particularly badly, experiencing the biggest rise in the country of 10,3 percent compared to the same quarter in 2021. Brandenburg and Saarland followed, with a 9,1-percent and 7,9-percent increase respectively.

Among German cities, Berlin experienced one of the biggest rises in comparison to the same quarter in 2021, a tremendous 8,3 percent. In Leipzig, a city which receives many newcomers who feel overwhelmed by the unaffordable and highly competitive rental market in Berlin, asking rents had an increase of 7,8 percent. Prices in Frankfurt and Munich, already considered expensive German cities, rose by 1,4 and 3,5 percent respectively, in comparison to the third quarter of 2022.

According to the Cologne-based institute, the increasing unaffordability of housing and rising rents are also a product of construction projects being cancelled due to rising construction costs. Researcher Felix Leiss told Tagesschau, “Interest rates and fewer subsidy options are weighing on new businesses and have led to conspicuously high numbers of cancellations."