Increased rent prices are showing less intensity - a high level of tenant demand persists - Soaring prices due to growing demand and limited supply
In the bustling heart of Europe, Germany's major cities continue to experience significant changes in their rental markets. As of mid-2025, Munich remains the priciest rental market in the country, with an average rent of approximately 22.64 euros per square meter. The city has seen a steady, moderate increase, with rents rising about 2.1% in Q2 2025 to approximately 19.30 euros per square meter for cold rent [2]. Median rents for a one-bedroom apartment in Munich are around €1,650.
Berlin, on the other hand, shows the highest decade-long rent growth, with average rents reaching 18.29 euros per square meter in 2025, a 107% increase since 2015 [1]. Despite rent control measures, the city's ongoing strong demand and limited housing stock have fuelled this steep rise.
Leipzig, though less dramatic than Berlin, has also seen substantial rent increases. Average rents in Leipzig are up by 66.7% over the past decade, showing the city’s growing popularity but still lower absolute prices compared to Munich or Berlin [1].
Stuttgart takes the third spot with an average offered rent price of 15.99 euros per square meter, while Leipzig is still the cheapest with an average offered rent price of 10.10 euros. However, the high demand for apartments in these cities may create challenges for apartment seekers, making it difficult for them to find suitable offers.
The housing market in Berlin seems particularly affected, with properties being snapped up quickly, as indicated by the average duration of advertisements decreasing from 34 days in 2015 to 23 days in 2025. The demand for apartments is very high, a fact confirmed by Jonas Zdrzalek, an IfW researcher.
The current housing market situation, marked by very high demand, is unlikely to see immediate price-reducing effects from current housing policy. However, the housing construction turbo, a political measure, is expected to have a braking effect on prices in the apartment market, although it will take some time.
Across Europe, rental price growth has slowed significantly in early 2025, with only minor increases in rents overall, reflecting a broader trend toward market stabilization. However, affordability challenges persist, particularly for single-person households and studio apartments.
The IfW examines rental development quarterly in 20 cities and regions, summarizing the results in the Greix rent price index. Despite the challenges, it's important to note that overall, rents in Germany’s largest cities increased on average by 50% between 2015 and 2025, with major cities seeing pronounced rises despite rent brakes introduced in 2015 [1].
Sources: [1] IfW Kiel, Rent Development in Germany's Largest Cities, 2025. [2] IfW Kiel, Quarterly Rent Development Report, Q2 2025. [3] Kiel Institute for the World Economy, Housing Market Trends, 2025. [4] European Central Bank, Rental Price Development Across Europe, 2025.
Community policy should address the challenges faced by apartment seekers in finding suitable offers, given the high demand for apartments in major German cities like Munich, Berlin, and Stuttgart. Finance, investing, and real-estate sectors may need to consider these trends when making decisions, as rental prices have increased significantly, with Munich remaining the priciest market, and Berlin showing the highest decade-long rent growth.
