Where rental prices are increasing the fastest in Germany

The Local Germany
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Where rental prices are increasing the fastest in Germany
In a high-rise building in Berlin, some windows are illuminated. Photo: picture alliance/dpa | Christophe Gateau

The rate of increase in rents in the third quarter exceeded last year's figure in all of Germany, with two eastern states seeing the largest rises, according to new data from the Institute of the German Economy (IW).

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The rise in residential rental costs in Germany has accelerated significantly again.

According to IW data, advertised rents climbed by an average of 5.8 percent year-on-year in the third quarter of 2022.

Over the past three years, the average price increase in the third quarter has been 4.5 percent – but in all German states, the increase exceeded this figure this year.


The states with the most sharply rising rents were Saarland (up 7.9 percent), Brandenburg (9.1 percent) and Mecklenburg-Western Pomerania (10.3 percent).

In the major cities, Berlin saw the most steeply rising rents (8.3 percent) followed by Leipzig (7.8 percent) and Düsseldorf (5.9 percent). There were moderate increases in asking rents in Frankfurt (up 1.4 percent on the previous-year quarter), Stuttgart (2.4 percent) and Munich (3.5 percent).

READ ALSO: EXPLAINED: The German cities where rents are rising fastest this year

"It shows that the momentum is increasing," said IW real estate expert Michael Voigtländer.

Increased lending rates, high construction prices and record inflation are making home ownership less affordable. Interest rates for ten-year real estate loans have more than tripled since the beginning of the year, which means that many people are instead switching to the rental market.

Voigtländer explained that, as well as an increase in the number of people looking for rental apartments, some landlords are setting higher rents because of high inflation and there are also catch-up effects in rural regions that still offer comparatively inexpensive housing.

The annual comparison of asking rents was based on almost 1.5 million advertisements on major real estate portals. Asking rents do not yet include any discounts that may eventually be added, but they do show a trend in how the market is developing. But, unlike purchase prices, its rare that rents can be negotiated. 

READ ALSO: The most expensive (and cheapest) cities in Germany to rent a room

DZ Bank and the Association of German Pfandbrief Banks (vdp) also recently noted an increase in rents. The reason for the "noticeably rising rents" is not only the shift in demand but also the increasing immigration with many refugees from Ukraine, DZ Bank said.


Rental market - (der) Mietmarkt

Interest rates - (die) Zinsen

Lending rates - (die) Kreditzinsen

Affordable - bezahlbar 

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