Rental prices in Germany continue to grow steadily, while the cost of buying real estate remains at a standstill. According to a recent report by the Housing Index of the Institute of German Economics (IW) for the 1st quarter of 2026, rents under new contracts increased by 3.5% on average in the country compared to the same period last year.
A particularly noticeable increase was recorded in the largest cities. In Dusseldorf, rent rose by 5.9%, in Cologne by 5.7%, in Hamburg by 5.1%. The only exception was Berlin, where rents decreased by 0.8%. However, IW experts explain that this is not a sign of a weakening of the crisis, but only a statistical correction after the abnormal growth caused by the lifting of the "rent ceiling" (Mietendeckel).
The strongest growth in rental rates is observed not in the megacities themselves, but in their suburbs. Rent increased by 4.2% around the seven largest cities in Germany, and by 3.9% around the rest of the major cities. For comparison, the growth in the million-plus cities themselves was 3.8%. The reason for this trend is simple: residents who are unable to pay more for housing in the center are moving to the suburbs, stimulating an increase in rates there.
The real estate purchase and sale market is showing stagnation. Apartments rose in price by only 2.5% in annual terms, and houses for one or two families only by 0.7%. Compared to the previous quarter, both segments remained virtually unchanged, showing growth of only 0.1%.
IW economists attribute the situation to the consequences of the war in the Middle East: the global oil shortage has not yet hit the housing market as hard as the energy crisis of 2022, but buyers have become more sensitive to the energy efficiency of buildings. "Since at least 2022, buyers have been paying more attention to how much energy a building consumes, and this trend is strengthening," says IW real estate economist Pekka Zagner.
Source: IW Köln
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