Housing Market Overview

Dynamic housing market with rising rents and stabilizing purchase prices

The Dusseldorf housing market continued to show robust and dynamic development in 2024. The capital of North Rhine-Westphalia experienced persistently high demand for housing with simultaneously tight supply.

In terms of offer rents, Dusseldorf was among the top performers among German metropolises in the second half of 2024. With an increase of 8.1 percent compared to the previous year, the city was significantly above the average of the examined major cities. This strong increase underscores the continued attractiveness of Dusseldorf as a residential location and the scarcity of available housing.

In the area of purchase prices for condominiums, a stabilization of the market was evident. After the price corrections of recent years, price declines in the second half of 2024 were only minimal. This development indicates that the phase of price adjustments is largely complete and that the market for homeownership in Dusseldorf is regaining attractiveness.

The demand for housing in Dusseldorf is driven by various factors. The city benefits from its strong economic base, which continues to attract workers. In addition, the high quality of life makes Dusseldorf a popular place to live, which puts additional pressure on the housing market.

Dusseldorf also proved attractive in the investment market. The city benefited from the general revival of the German residential investment market, which reached a total volume of 9.84 billion euros in 2024. Investors particularly appreciate Dusseldorf's stable economic situation and the potential for value appreciation in the real estate sector.

The challenge for Dusseldorf remains to create sufficient new housing to serve the increasing demand. As in many other German cities, a decline in building permits and completions is expected here as well, which could further increase pressure on the housing market.

For the year 2025, it is expected that rents in Dusseldorf will continue to rise, albeit possibly at a somewhat slower pace. For purchase prices, increasing price dynamics are expected, with development varying depending on location and quality of the properties.

Overall, the Dusseldorf housing market remains an attractive location for tenants, buyers, and investors. However, the city faces the challenge of expanding the housing supply while ensuring the affordability of housing. Further development will largely depend on how successfully Dusseldorf can shape this balance between growth and sustainability.

Stable housing market with dampened dynamics

The Frankfurt housing market showed robust development in 2024, although further increases in rents and condominium prices remained absent on average.

In terms of offer rents, Frankfurt was in the middle range of German metropolises in the second half of 2024. With a slight decrease of -1% compared to the previous year, the market showed stability. The median rent for existing apartments was 14.55 €/m² in 2022.

In the area of purchase prices for condominiums, a stabilization of the market was evident. After the price corrections of recent years, prices were almost constant in the second half of 2024. The median offer price for existing apartments was 6,090 €/m² in 2022.

The demand for housing in Frankfurt remains high, driven by the strong economic base and high quality of life. However, the number of households decreased slightly from 2021 to 2022 by about 3,000 to 403,530, which is attributed to relocations to the surrounding area during the Corona pandemic.

On the supply side, 3,012 housing units were completed in 2021, significantly below the average since 2015 (3,595 housing units). However, 2023 showed a positive development: A total of 3,661 apartments were completed, representing an increase of +24% compared to the previous year. This value is also slightly above the average of the last ten years.

Despite this positive development in completions, there is a significant decline in building permits. In 2023, only 3,205 building permits for new apartments were issued, which represents a decrease of about -30% compared to the previous year and is also the lowest value since 2010. This suggests a decline in completions for the coming years.

An interesting development is seen in the repurposing of office and commercial spaces. In 2023, 459 of the approved apartments were such repurposings. Although this value is slightly below the previous year's value of 463 conversions, it remains significantly below the peak value of 2018, when 1,985 apartments were created in former office buildings.

Frankfurt has the second-lowest vacancy rate among A-cities after Munich at 0.3%. This underscores the continued attractiveness of the location for housing seekers and investors.

To address the challenges, the city of Frankfurt am Main is currently working on the further development of municipal funding programs and the designation of additional building areas. Around 250 million euros are available in the 2024/25 budget for subsidized housing construction.

Overall, the Frankfurt housing market remains an attractive location for tenants, buyers, and investors, but faces the challenge of creating sufficient new and affordable housing.

Resilient Hanseatic city with ongoing housing demand

The Hamburg housing market continued to show robust development in 2024 despite changed conditions in the real estate markets.

In the rental market, the median rent rose to 16.62 €/m² in the second half of 2024, representing an increase of +7.7% compared to the previous year. The new construction sector in particular showed strong dynamics with an increase to 20.91 €/m², which is a plus of 13% compared to the previous year.

In the condominium market, there was a slight recovery. The median purchase price for existing apartments was 5,544 €/m², representing an increase of +2.1% compared to the previous year. For new construction apartments, the increase was significantly stronger at +9.4% to 8,404 €/m².

With a vacancy rate of only 0.5% - one of the lowest nationwide - a significant demand surplus will continue to dominate the housing market of the Hanseatic city. Consequently, it can be assumed that the pressure on rents will remain high.

Over a five-year period, the Hamburg housing market shows remarkable development:

• Existing rents increased by an average of 4.4% per year.

• New construction rents recorded an annual increase of 5.3%.

• Purchase prices for existing apartments increased by 6.5% per year.

• For new construction apartments, the annual price increase was 9.2%.

These figures underscore the ongoing attractiveness of Hamburg as a residential and investment location. Despite the challenges posed by rising interest rates and construction costs, the Hamburg housing market remains dynamic. Further development will largely depend on how successfully Hamburg can shape the balance between growth, sustainability, and affordability.

Robust housing market with moderate price growth

The Cologne housing market continued to show robust development in 2024, despite the changed framework conditions in the real estate markets.

In terms of offer rents, Cologne was in the middle range of German metropolises in the second half of 2024. With a moderate increase of +3.3% compared to the previous year to 15.49 €/m² median, the market showed stability. Particularly in the new construction segment, the dynamics were noticeable with an increase of +0.8% to 18.65 €/m².

In the area of purchase prices for condominiums, there was a slight recovery of the market. After the price corrections of recent years, prices had risen by +2.4% to 4,820 €/m² median in the second half of 2024.

The demand for housing in Cologne remains high, driven by the strong economic base and high quality of life. The number of households decreased slightly from 2021 to 2022 by about 5,800 to 575,542. Despite this slight decrease, the housing market in Cologne remains tight, which is reflected in rising rents and purchase prices.

On the supply side, a total of 3,533 apartments were completed in 2023, representing an increase of +52% compared to the previous year. The number of building permits in 2023 was 3,211, which is above the average of the last five years.

With a vacancy rate of only 0.9% - one of the lowest nationwide - a significant demand surplus will continue to dominate the housing market in the cathedral city. Consequently, it can be assumed that the pressure on rents will remain high.

To address the challenges, the city of Cologne is currently working on the further development of municipal funding programs and the designation of additional building areas. At least 100 million euros are available for subsidized housing construction in the 2024 housing promotion program of the state of North Rhine-Westphalia.

Overall, the Cologne housing market remains an attractive location for tenants, buyers, and investors, but faces the challenge of creating sufficient new and affordable housing.

Housing shortage despite increasing completion numbers

The Leipzig housing market is currently in an acute crisis: The housing shortage in Leipzig is comparable to the situation after reunification about 30 years ago. There is not enough supply available for relocations or new arrivals, resulting in overall low fluctuation.

A decisive factor for the current housing shortage is the ongoing immigration to Leipzig. Over the past five years, Leipzig's population has grown by +5.4% overall. The Leipzig housing market has been experiencing a tightening of the supply-demand ratio for years.

This development is also reflected in rental and purchase prices. In the second half of 2024, offer rents increased by +9.9 percent compared to the previous year to 10.45 €/m² median. This is the highest increase among the Big 8 cities. Over a five-year period, rents even increased by +44.1 percent. For condominium purchase prices, there was a slight stabilization. With an increase of +0.7 percent compared to the previous year to 3,008 €/m² median, this indicates a gradual stabilization of the homeownership market.

The number of completed apartments has fluctuated in recent years. In 2023, a total of 3,533 apartments were completed, representing an increase of +52% compared to the previous year. This amounts to about 41 completed apartments per 10,000 inhabitants, placing Leipzig among the top positions behind Munich and Frankfurt compared to other Big 8 cities.

However, building permits issued in 2023 decreased by -27% compared to the previous year to a total of 2,287 building permits. This could lead to a decline in completions in the coming years.

To counteract this trend, the city of Leipzig updated its housing policy concept in the first half of 2024. Based on this, the city aims to preserve affordable housing in all districts of Leipzig and create new housing even in times when new housing construction is weak. As part of the updated concept, the housing supply is to be increased and improved through strategic land acquisition, social preservation statutes, and social housing promotion.

High prices and dampened dynamics in the housing market

The Munich housing market remains the most expensive in Germany in 2024, but shows dampened price development. As a vibrant economic metropolis with the highest purchasing power per inhabitant among German major cities, Munich maintains its top position, but faces challenges.

Rent price development in Munich showed a moderate increase in the second half of 2024. Offer rents increased by +3.7% compared to the previous year to an average of 23.33 €/m². In the new construction segment, the increase was slightly stronger at +4% to 21.85 €/m². Over a five-year period, rents increased by 16.6%, which is rather moderate compared to other metropolises.

For condominium purchase prices, a slight stabilization was evident. After significant price corrections in previous years, prices only decreased slightly in the second half of 2024. With an increase of 1% compared to the previous year to 8,790 €/m² median for existing apartments, this indicates a gradual stabilization of the market for homeownership. New construction apartments cost an average of 11,050 €/m², an increase of +11% compared to the previous year.

The supply of housing can hardly meet the demand. With a vacancy rate of only 0.2%, Munich continues to have the lowest vacancy rate in the entire country. However, construction activity showed positive development in 2023: A total of 9,837 apartments were completed, representing an increase of +31% compared to the previous year. Even in relative comparison with the other Big 8 cities, Munich leads with about 62 completed apartments per 10,000 inhabitants. The number of building permits also increased: The local building commission issued 9,083 building permits last year, an increase of +12.3% compared to the previous year. On average, just under 9,700 apartments per year have been approved in the last five years. Nevertheless, the additional demand for housing units exceeds the completion level even in the Munich housing market.

Despite the changed framework conditions, the overall market continues to show robust development. Munich remains an attractive location due to its economic strength, the headquarters of numerous corporations, and its high leisure and living value.

For the future, continued pressure on existing rents is expected, as completion numbers are likely to continue to decline and the population is growing. For purchase prices, the phase of price corrections seems to be largely complete. In the medium term, further rising rent levels are expected, while the price-finding phase in the purchase market could continue for a while.

Stable rents and slight recovery in purchase prices

The Stuttgart housing market showed largely stable development in the second half of 2024, with a slight recovery in purchase prices for condominiums. Offer rents increased moderately by 3.1% compared to the previous year to an average of 16.50 €/m². This puts Stuttgart in the lower range of rent price development among the examined major cities.

For existing rents, the increase was slightly more pronounced at +3.9%. For new construction apartments, however, rents decreased slightly by -2.2%, with a minimal increase of +0.7% remaining after quality adjustment. Over a 5-year comparison, rents in Stuttgart have increased by +11.8% overall, which represents a rather moderate development compared to other metropolises.

For condominium purchase prices, a stabilization is emerging. After prices had corrected significantly in previous years, they only decreased slightly by -2.9% to an average of 4,574 €/m² in the second half of 2024. This indicates a gradual stabilization of the homeownership market. Existing apartments were offered at an average of 4,452 €/m², while new construction apartments were significantly more expensive at 8,528 €/m².

Completion figures showed positive development in 2023. With a total of 1,891 completed apartments, a level was reached that corresponds to that before the Corona pandemic. This represents an increase of 86% compared to the previous year. At the same time, the existing construction backlog decreased by 17%.

However, building permits in 2023 fell to the lowest level in the last ten years. Only 1,092 building permits were issued, 6% fewer than in the previous year. With only 19 building permits per 10,000 inhabitants, Stuttgart lags significantly behind other major cities.

To stimulate housing construction, the city of Stuttgart plans to enable the construction of 20,000 new apartments by 2033. 30% of the newly created apartments are to be realized as social housing and a further 10% as price-dampened rental or owner-occupied apartments.

For 2025, a further decline in completions is expected due to the low number of building permits, which is likely to increase pressure on the housing market. Rents are expected to grow moderately, while purchase prices are likely to continue stabilizing and could slightly increase over the course of the year.