Rents up 4.5% in Germany as purchase prices stall, IW says

Housing in Germany keeps getting more expensive for renters. According to the housing index published on Oct. 23, 2026, by the German Economic Institute (IW), rents nationwide in the third quarter of 2026 were 4.5% higher than a year earlier. In the big metropolitan areas they rose somewhat more slowly, at 3.8%, while in the areas surrounding the big cities they rose faster, at 5.2%. Hamburg stands out with an increase of 6.8%; Cologne saw 5.3% and Essen 4.9%, according to Reuters. Since 2022, rents in Berlin have risen 29.5%, according to IW data – more than in any other large city studied.

Purchase prices are moving very differently. Condominiums nationwide were only 0.3% more expensive than a year earlier, and single- and two-family houses 0.4%. In the seven largest cities, apartment prices even fell slightly, most sharply in Stuttgart at minus 3.9%, followed by Berlin at minus 2.0%. Overall, purchase prices are more than 10% below their 2022 peak, the IW said. The reason is higher financing costs: according to the study, a €300,000 loan with 2% repayment cost about €1,450 a month at the start of 2026 and now costs about €1,600.

"High interest rates are driving affluent households back into the rental market," said IW economist Michael Voigtländer. Because construction costs are rising at the same time, new building is likely to slow, pushing rents higher still, study authors Pekka Sagner and Voigtländer expect. Voigtländer called on the state to counteract, "for example with guarantees for private property loans." The IW is an employer-affiliated research institute.