German Rent Prices Surge as Housing Shortage Worsens

A DIW analysis reveals a 4% rise in rents for 2024, compounded by historically low vacancy rates and declining new construction approvals.

Rents in Germany increased by an average of 4% in 2024, continuing a trend of rising housing costs since 2010, with a total increase of 64% over the period.
The housing market remains strained, with vacancy rates hitting historic lows, averaging 2.5% nationally and just 1% in Berlin.
New housing construction approvals dropped by 19.5% compared to the previous year, with fewer than 300,000 new homes built in 2023, far below the government's annual target of 400,000 units.
While property purchase prices fell by 5% on average in 2024, a mid-year reversal saw prices begin to rise again due to easing credit conditions and persistent demand.
Experts warn that the housing shortage is unlikely to improve without significant government intervention, including increased public construction and streamlined approval processes.