Germany’s housing crisis deepens as prices and rents surge in major cities

Homebuyers and renters feel the squeeze as demand outpaces supply. Can new policies like state-backed loans and faster permits ease the crisis?

, and Administrator

2025 November 10 . 1:04 PM

1 min read

In this image we can see the view of the city. In the middle there is a ring road on which there... — In this image we can see the view of the city. In the middle there is a ring road on which there are vehicles. At the bottom there is another road on which there are cars and bikes. In the background there are so many tall buildings. At the top there is the sky. On the left side bottom there are trees. we can see small houses somewhere in the middle of the city.

Real estate prices rise significantly - "Construction boom is not enough" - Germany’s housing crisis deepens as prices and rents surge in major cities

Property prices in Germany have surged, with both condominiums and single- and multi-family homes seeing increases. The country's major metropolitan areas, in particular, have witnessed significant hikes in prices, raising concerns about persistent housing shortages.

In the third quarter, property prices rose by 3.8 percent year-on-year, with major cities seeing an average increase of 4.6 percent. Jens Tolckmitt, CEO of the Association of German Pfandbrief Banks (vdp), warns that shortages in metropolitan areas are likely to persist for several more years. The construction boom, while positive, is not keeping pace with demand.

Rents have also climbed, with new contracts for multi-family homes seeing an average increase of 3.7 percent nationwide and 3.8 percent in major cities. The steepest rent hikes occurred in Düsseldorf and Frankfurt, where rents jumped by around five percent. In Munich, Düsseldorf, Hamburg, and Cologne, residential property prices surged by more than five percent year-over-year.

To address these issues, proposals include state guarantees covering 80 percent of property loans to enable large-scale new housing construction. The federal government also aims to accelerate and simplify building permits to increase housing construction.

Germany's property market continues to see significant price and rent increases, particularly in major cities. While construction is booming, it's not enough to keep up with demand. To tackle persistent housing shortages, the government is considering measures such as state loan guarantees and streamlined building permits.