In the seven largest cities—Berlin, Hamburg, Munich, Köln, Frankfurt, Stuttgart, and Düsseldorf—the annual rent increase was about 2.9%, signaling regional variation within major urban centers.

The housing picture shows a contrast: high demand and rising rents paired with limited rental supply, while financing hurdles dampen home purchases and raise costs for buyers.

Two bottlenecks dominate: a purchase market constrained by financing costs and a rental market with sustained demand against a tight, uneven supply.

Since the shift in interest rates, listings for sale have grown, with nearly double the condos and roughly 140% more single- and two-family homes on the market versus early 2022, indicating weaker demand and longer marketing times rather than a surge in supply.

IW economist Sagnar notes that price and listing trends reflect softer demand and longer time on the market rather than a meaningful expansion of supply.

The report emphasizes that the stock of homes for sale has risen since higher rates began, influencing price dynamics in the buy market.

Tight rental supply is partly driven by long-tenured tenants remaining in affordable, low-rent units, dampening market adjustment.

Rent increases are most pronounced in large cities outside the top metros, with overall rents up about 4% year-on-year in Q2; cities like Köln, Hamburg, and others saw particularly strong gains, while Stuttgart and Berlin rose more modestly.

Across Germany, rents rose 4% year-on-year in the second quarter, according to IW, reflecting rising costs and tight supply in many markets.

Berlin remains an exception with rental listings above early-2022 levels, but overall rental supply remains well below pre-disruption levels.

In early 2026, asking rents rose by around 1.3% quarter over quarter, signaling continued upward pressure on the rental side.

Rental listings have contracted significantly in many areas, with nationwide listings about 12% below early-2022 levels; Hamburg listings have fallen by more than half and Frankfurt by 43%.