The German residential market saw a significant divergence between the existing and new-build segments in 2025. Whilst asking rents for existing properties rose noticeably, rent levels for new-builds stagnated or even fell slightly. At the same time, the moderate recovery in purchase prices continued, with existing properties again seeing stronger growth than new-builds. These developments reflect both the economic situation and structural changes in the major cities.
Rental market: Existing flats drive growth
After the rise in rents had slowed to 3.9 per cent year-on-year by mid-2025, momentum picked up again in the fourth quarter. Overall, asking rents at the end of 2025 were 5.2 per cent higher than the previous year’s figure. The contrasting trends across the segments are striking: whilst rents for existing properties rose by 6.1 per cent, new-build properties recorded a slight decline of 0.5 per cent in median and prime rents. Jan-Bastian Knod, Head of Residential Investment Germany at Cushman & Wakefield: “This trend is primarily attributable to the ongoing economic downturn. As fewer high-paying jobs are currently being created, the target group with strong purchasing power – which typically drives demand in the expensive new-build segment – is shrinking. The existing housing stock, on the other hand, is benefiting from broad demand for affordable housing and the continuing shortage of supply.”Regional differences: Hamburg shows the strongest growth
Rent trends varied significantly across the top seven cities. Hamburg recorded the strongest growth with an increase of 8.8 per cent, thereby continuing its dynamic development of recent years. Berlin showed the weakest performance with an increase of just 0.7 per cent, although this should be viewed against the backdrop of the exceptional price surges between the end of 2022 and mid-2024. Munich remains the most expensive market across all segments: the average rent for existing properties stands at €22.40 per square metre per month, whilst the top rent for new-builds is €31.60 per square metre per month.Supply shortage for rental flats persists
The supply of available rental flats remained extremely tight in 2025. In the top seven cities, the number of listings in the fourth quarter stood at 7.1 per 1,000 existing flats, remaining well below the ten-year average of 8.5. The market tightened particularly sharply in Hamburg, where supply fell from 7.3 to 5.1 listings per 1,000 existing flats within a year. This makes Hamburg the tightest rental market among the major cities and has, for the first time, surpassed Berlin (6.6).Purchase prices in the existing housing stock are recovering faster than in new-builds
The purchase market also continued its recovery, which has been underway since mid-2024. The median purchase price for owner-occupied flats in the fourth quarter of 2025 was 2.7 per cent higher than the previous year’s figure. This trend is driven primarily by existing flats, whose prices rose by 4.0 per cent.
Despite this recovery, the median price for existing properties remains 3.3 per cent below the peak reached in the second quarter of 2022, at €5,915 per square metre. Adjusted for inflation, this represents a decline of 13.8 per cent.
In the new-build sector, by contrast, the market was largely stagnant. Median prices rose by just one per cent, whilst top prices fell by 0.8 per cent. The median price currently stands at €9,095 per square metre, with the top price at €13,610.
Striking regional differences in purchase price trends
In a comparison of locations, Düsseldorf and Hamburg show the strongest momentum, with increases in median purchase prices of 8.5 and 4.4 per cent respectively. At the lower end of the scale are Frankfurt and Stuttgart, each with 0.7 per cent.The situation in Stuttgart is particularly striking: Following an above-average price decline from 2022 onwards, the market only stabilised minimally by mid-2025. The median price for existing properties remains 18.0 per cent below the 2022 peak in nominal terms, and as much as 26.9 per cent lower when adjusted for inflation. The causes lie in structural challenges facing the local economy, which is heavily reliant on the automotive and export sectors.
Number of properties for sale reaches new ten-year high
The number of online listings for the sale of owner-occupied flats rose again in 2025, reaching a new ten-year high of 8.5 listings per 1,000 existing flats. This means that the number of properties for sale in the top 7 cities is now just under 20 per cent higher than the number of properties for rent. This discrepancy is particularly pronounced in Munich and Berlin, which also have the highest numbers of listings. In these two cities, the difference between asking rents and existing rents is also the greatest. Hamburg and Cologne remain the tightest buyer’s markets. Jan-Bastian Knod comments: “As mortgage rates are stable or trending slightly upwards, no additional growth momentum is expected from this side. However, the extremely tight rental market is forcing some prospective tenants into the buyer’s market, who can also expect rising wages, meaning that the moderate price recovery is likely to continue into 2026.”Affordability improves slightly – particularly in new-build properties
Despite rising asking rents, the affordability of rented accommodation improved slightly in 2025. The reason for this is the above-average growth in net household income. In new-build properties in particular, the stagnation in rents led to a noticeable easing of the burden: the calculated cost burden for an average household for an 80-square-metre new-build flat fell from 35.2 to 33.6 per cent. In the existing housing stock, the decline was more moderate, falling from 26.2 to 25.8 per cent.
There has also been a slight easing in the cost of buying a home. The burden of interest and repayment fell to 53 per cent of net household income for new-build properties and to 34 per cent for existing properties. Despite this trend, the ongoing financial burden remains high by historical standards. However, the relative affordability of the required equity has improved significantly: purchasing an existing flat currently requires 2.3 times annual net income – the lowest figure since 2017. For new-build properties, the figure stands at 3.6 times annual income, returning to the 2019 level.
“For 2026, it is expected that both rent growth and wage increases will slow slightly. Overall, this is likely to lead to a further, albeit minimal, improvement in affordability for new tenants,” says Nicole Hock, Team Lead Residential Valuation Germany at Cushman & Wakefield.
And Jan-Bastian Knod concludes: “Mortgage rates are expected to remain stable or rise slightly in 2026. If this coincides with purchase prices rising somewhat more sharply again, the affordability of home ownership is likely to remain largely unchanged. However, this segment generally harbours a higher potential for volatility: stronger, unexpected movements in mortgage rates could alter affordability in either direction surprisingly quickly.”