Rents in German Cities Rise 50% Over a Decade

Over the past ten years, residential rents in Germany’s largest cities have increased by an average of 50%, despite the introduction of the “Mietpreisbremse” rent control law in 2015. This was reported by IamExpat, citing the Federal Institute for Research on Building, Urban Affairs, and Spatial Development.

Rates and Yields

According to the institute’s data, the highest average rents in 2025 were recorded in Munich — €22.64 per square meter — and in Frankfurt — €19.62. However, the cities leading the growth rates were others: in Berlin, rental rates increased by a record 107% over the decade, reaching €18.29 per square meter. In Leipzig, the growth was 66.7%, while in Bremen it was 57%. The smallest increase was recorded in Dresden — 28.4% over ten years, although, according to the ImmoScout24 portal, the average rent there still stands at €9.01 per square meter.

According to Deutsche Bundesbank, in 2023, rents in Germany increased by 5%, and by 3.5% in 2024. The trend in the major cities is similar: Berlin saw a slight decrease of 1% in rents. The most expensive cities, analysts said, were Munich (€23.33), Berlin (€19.23), and Frankfurt (€18.33 per square meter). The most affordable major market is Leipzig, where the average rate stands at €10.45.

According to Centrarium, at the beginning of 2025, rental housing prices nationwide rose by 6.38% compared to the same period last year, reaching €13.55 per square meter. In Berlin, growth rates were even higher — 16.1%.

The high level of activity in the rental market is explained by the fact that 52.2% of households in Germany rent their homes (compared to 47.5% in 2014). According to Global Property Guide, the average rental yield across the country is 3.82%, with Leipzig showing 4.99% and Berlin 4.76%.

Criticism of the Mietpreisbremse Law

The sharp rise in prices has raised concerns among politicians. Representatives from various parties are demanding a review of the Mietpreisbremse law, considering it ineffective. Left Party MP Caren Lay stated that the current mechanism is “so weak that it essentially offers no protection,” adding:

“The explosive growth in rents is bleeding tenants dry in big cities, making moving impossible and intensifying social inequality.”

The law, passed in 2015 under the coalition government led by the CDU, allows tenants to demand a refund of any overpayment if their rent exceeds the established index (Mietspiegel) by more than 10%. However, it does not apply in certain cases: newly built properties first let after 2014, modernized apartments, short-term rental contracts, and situations where prices were already above the limit before the law came into force.

“Hotline” in Berlin

In 2020, Berlin attempted to introduce its own rent cap, but the Constitutional Court ruled the law invalid. Since then, the city’s mayor, Kai Wegner (CDU), has been advocating for federal regulation. Against the backdrop of continued price increases, Berlin authorities launched a special “hotline” for tenants. The reason was data from the company Conny, which showed that 75% of tenants in Berlin are overpaying. Many are unaware of their rights or afraid to assert them, especially those subletting apartments.

The hotline specialists help determine whether charges are legal and explain how to secure recalculations. SenStadt representative Sandra Obermeier stated that no one should be forced to pay excessive rent. At the same time, she emphasized that consultations do not solve the underlying housing shortage problem.

According to the Institute for Economic Research (IW), in 2024, rents increased by 8.5% in Berlin, by 8% in Frankfurt, and by 8.2% in Essen. In Düsseldorf and Leipzig, growth reached 7.2% and 7.3%, respectively.

The IW study shows that in 1991, only 5% of households in Germany spent more than 40% of their income on rent. By 2024, this figure had risen to 14%, while the pan-European benchmark is a maximum of 30%. Tenants with new rental agreements are particularly vulnerable: according to ImmoScout24, they faced the highest price hikes — on average 30% over two years.

Forecasts: Growth to Continue

According to analysts, the rental and housing market in Germany will maintain its upward trend in the second half of 2025 and into 2026. A Reuters poll conducted in May expects that housing prices will rise by around 3% by the end of 2025, with the same growth forecast for the following year. The key factor remains the acute housing shortage: construction volumes are failing to meet demand, despite lower ECB rates and a partial recovery in mortgage lending.

Housing affordability continues to decline. The situation is particularly severe in major cities, where demand consistently exceeds supply, and purchasing power remains limited. According to ING’s chief economist Carsten Brzeski, renting has become the only option for many who cannot afford to buy. He believes the structural housing shortage will persist even if interest rates fall.

Experts predict rental rates will rise faster than property purchase prices — at around 4-5% per year. This trend is driven by high demand and the absence of effective regulatory mechanisms at the federal level. By the end of 2025, the German rental market is expected to remain tight, with a high likelihood of further price increases in 2026.