Real Estate Market Remains Tense – Rents and Apartment Prices Are Rising

Konstantin A. Kholodilin and Malte Rieth

DIW Weekly Report, 2025, vol. 15, issue 51/52, 367-375

Abstract: After two years of significant price declines, the German real, estate market is showing signs of slight stabilization. Once, again, building plots and single-family homes have become, slightly cheaper – nominally by one percent compared to, 2024. In 2024, the declines were four and seven percent, respectively. Prices for row houses and apartments, on the other hand, rose slightly by 0.5 percent. Price developments vary depending on the type of location: In major cities, building plots have fallen in price by five percent, while apartments and single-family homes have become slightly more expensive. Prices remained largely stable in all other regions. Rents rose by an average of around four percent nationwide, both for existing and new buildings. The increase was particularly strong in major cities, where it soared by up to eight percent, in some cases. The population is growing, while the number of constructed apartments continues to decline. Thus, housing remains scarce. Together with a weak macroeconomic environment, this is likely to cause rents to rise in the future, as fewer and fewer people can afford to buy property. Politician, are urgently called upon not just to promote housing construction, but also to simplify procedures and regulations that hinder construction in order to counteract the housing shortage.

Keywords: speculative real estate price bubbles; explosive root tests; German cities and municipalities (search for similar items in EconPapers)
JEL-codes: C32 E27 E32 (search for similar items in EconPapers)
Date: 2025
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