Trend city Berlin – real estate prices continue to rise
The leading research institutes, research departments, appraisal committees, statisticians and market observers published their figures on the real estate market in Germany at the beginning of the year. The results are revealing and provide an outlook for future developments. After a decade of boom and a temporary slowdown in 2022/2023, there are now signs of stabilization. Property prices are rising moderately again, but nowhere near as dynamically as in the peak years before.
Berlin – city of opportunities
Berlin is a modern, efficient metropolis with international appeal. The rapid development of the past three decades is vividly reflected in the contrasts between challenges and opportunities. The charm of the prosperous federal capital lies in its tolerance, openness and cultural diversity. The formerly divided city has long since regained its status in the competition between international European cities such as Vienna, Paris and London.
Berlin is characterized by its central location in the heart of Europe. As a political center with an eventful history, Berlin stands for the political reunification of Germany. The city is the seat of government, the center of numerous organizations, associations and media, it is the center of scientific, cultural and administrative institutions as well as a meeting place for business, politics and culture. The city is a center of attraction for the creative, information and communications industries.
The number of people in employment in Berlin has been rising faster than the national average for years – in the second quarter of 2023 alone, employment grew by 1.6% year-on-year to around 2.19 million. Purchasing power is currently still around 5 % below the national average, but shows high potential. The current population forecast assumes further growth; according to earlier projections, Berlin will have around 3.925 million inhabitants by 2030 (compared to around 3.7 million people in 2024).
Berlin is attracting attention – with spectacular projects: Berlin Brandenburg Airport is finally ready for use, Siemensstadt 2.0 in Spandau is opening up new perspectives, Potsdamer Platz is being redeveloped, and soon the Alexander Tower, a residential high-rise in the immediate vicinity of Berlin’s Alexanderplatz next to the Alexa shopping center with its 150-meter height, will show where the journey is heading – upwards. When it is completed in 2023, the building will be the tallest residential tower in Berlin and one of the tallest in Germany.
The real estate market is going from record to record – at least until 2021. Although the pandemic has also left its mark on Berlin, interest in real estate in Berlin has been lively until then, while the supply of housing has been tight. According to the Berlin Senate, the demand for housing will be around 20,000 apartments per year by 2030. The construction boom of recent years has barely kept pace with demand, and there is currently a slump in construction activity (significantly fewer building permits were issued in 2024 than in the previous year). There are also obstacles: Controversial discussions about milieu protection areas, rent controls and rent caps caused uncertainty. Although the Federal Constitutional Court overturned the rent cap in 2021, some investors initially remained cautious.
Prices for residential real estate in Germany until 2025
Data from the Federal Statistical Office clearly shows the development of residential property prices in Germany. After extraordinary increases until 2021 (around +12.0% year-on-year in the 3rd quarter of 2021 – the highest growth since the start of the time series in 2000), a turnaround followed in 2022/23. In the 3rd quarter of 2023, residential property prices fell by 10.2 % year-on-year, the sharpest decline in decades. The market did not stabilize again until mid-2024. In the 2nd quarter of 2025, prices were on average 3.2% higher than in the same period of the previous year. Apartments and detached and semi-detached houses became slightly more expensive again in the current quarter (Q2 2025) by around 1.1% compared to the previous quarter – an indication of a cautious recovery after the correction phase. By comparison: in the boom quarter of Q3 2021, prices had risen by 4.2% compared to the previous quarter.
House price index (2015 = 100)
After index levels of well over 180 points in 2022, there was a slowdown in 2023. This was particularly pronounced in the major cities. A particularly strong price increase was previously observed in the top 7 metropolitan areas of Berlin, Hamburg, Munich, Cologne, Frankfurt, Stuttgart and Düsseldorf – where prices for detached and semi-detached houses and condominiums had risen by around 14% in 2021 compared to the previous year. However, it was precisely in these cities that the most significant declines were recorded: In the seven largest cities, prices for detached and semi-detached houses fell by 9.5% year-on-year in Q1 2024. In rural regions, the correction was somewhat milder at around -6% to -7%.
Real estate market report 2023 of the expert committees
(Source: Achim Scholty, Pixabay)
Together with the Federal Institute for Research on Building, Urban Affairs and Spatial Development (BBSR), the working group of official expert committees has presented the latest Real Estate Market Report Germany 2023. According to the report, the residential real estate market was initially unaffected by crises for over a decade before the interest rate turnaround in 2022 put an abrupt brake on momentum. Investments in the purchase of real estate doubled between 2010 and 2020; in 2020, a monetary turnover of 310 billion euros was achieved – a record figure. However, activity fell noticeably in 2022 and 2023: in 2023, only around 733,000 real estate transactions took place nationwide, 15% fewer than in 2022. The resulting monetary turnover fell by 29% to around €213.3 billion. The markets collapsed in the major cities in particular – turnover in the eight largest cities fell by 53% within two years (from €83.8 billion in 2021 to €39.2 billion in 2023). Nevertheless, residential properties still accounted for around three quarters of all real estate sales (75% in 2020, compared to around 66% in 2015) – the residential market therefore continued to dominate. Compared to the previous year (2022), however, investments in residential real estate fell significantly.
Buyers in the district of Munich continued to pay the most for used detached and semi-detached houses – around EUR 11,900 per square meter of living space in 2023. The national average in 2023 was around €2,400 per square meter for existing single-family homes. This is still a good 100% more than in 2010 (€1,190/m²), despite the recent price falls. The extreme spread in real estate prices therefore remains: In favorable regions (e.g. rural districts in eastern Germany), houses were sometimes traded for less than €800/m², while Munich achieved a multiple of this value – a disparity of around 1:19.
Danger of real estate price bubbles – development confirms the warnings
There were speculative exaggerations in more and more regions and market segments in 2021, particularly for condominiums and building plots in major cities such as Berlin, Hamburg and Munich. There – but also in other major cities – large-scale price corrections seemed possible in the following years. While purchase prices for residential property climbed by an average of 9% in 2021, rents only rose by around half as much at the time. As real estate prices should be linked to the development of rental income and thus to the general income trend in the long term, the increasing discrepancy between rents and purchase prices pointed to speculative bubbles.
Today – four years later – it is clear that this discrepancy could not be maintained in the long term. As mentioned above, purchase prices fell in 2023 for the first time in many years, while rents continued to rise. The major cities were particularly affected by the price correction; there, for example, building land prices and home prices fell by 6-7 %. At the same time, asking rents rose by around 3-5% in 2023 (depending on the segment). The turnaround in interest rates and more difficult financing played a decisive role here. In other words, the price bubble that emerged in some cities has burst, leading to significant regional adjustments – but the basic demand for housing remains high.
(Source: wal_172619, Pixabay)
empirica real estate price index: trend reversal after highs
The empirica research institute regularly publishes the empirica real estate price index, the empirica bubble index and the empirica affordability index. On average across all construction years, the indices for rental and owner-occupied apartments as well as detached and semi-detached houses continued to rise in the fourth quarter of 2021 – by 2.9% for owner-occupied apartments compared to the previous quarter and by as much as 3.1% for detached and semi-detached houses. At +1.2%, rental prices rose significantly less than purchase prices at the same time. The indices for newly built apartments and detached and semi-detached houses reached new highs at the end of 2021: condominiums were up 2.6% on the previous quarter, newly built detached houses +3.3%. Growth in newly built rental apartments was again the lowest at +1.0 %.
The picture has since changed. According to the empirica index for Q4 2023, prices are still falling slightly, but the downward momentum has slowed noticeably. Condominiums became only 1.1% cheaper on average in Q4 2023 compared to the previous quarter, while single-family homes fell by 1.4%. Newly built condominiums even showed an initial stabilization at +0.5 % compared to Q3 2023. At the same time, rents continued to rise: the rental price indices rose again by around 1.3 % at the end of 2023 compared to the previous quarter. The empirica analysts speak of a “slow stabilization of purchase prices”. According to empirica, the existing purchase market was already largely stable in the third quarter of 2024, while new-build purchase prices were still rising slightly. This confirms that the market turnaround has slowed down – the price decline in 2022/23 has bottomed out and is now moving sideways.
Highest increase in construction prices since 1970
A few years ago, building your own new home was still seen as an alternative to buying a second-hand house or an older condominium. In the meantime, however, construction prices have risen so sharply that this option is now only open to builders with a good financial cushion. The construction price indices for residential buildings and road construction illustrate the trend. Prices for the construction of new residential buildings in Germany rose by 16.3% in 2022 compared to the previous year. This exceeded the already enormous increase in 2021 (+14.4% compared to 2020). At times in 2022, the annual increase was even almost 18% – the highest increase in construction prices since 1970. This extreme rise in costs is due to material shortages, exploding raw material prices and high demand. Inflation only flattened out somewhat in 2023; in August 2025, construction prices for residential buildings were still +3.1% higher than the previous year.
The consequences: New construction projects are becoming increasingly expensive and are often postponed or canceled. New residential construction is lagging behind demand – instead of the politically targeted 400,000 apartments per year, in some cases less than 300,000 have been completed in recent years. At the same time, interest rates for building loans have risen sharply, making many construction projects even more difficult. Against this backdrop, for many it is once again more worthwhile buying an existing property than building a new one – but even existing properties are in short supply. This is driving up prices in the long term, despite the short-term slowdown.
Construction price indices for residential buildings and road construction (2015 = 100)
According to the Federal Statistical Office, prices for the construction of new residential buildings in Germany rose by 14.4% in November 2021 compared to November 2020. This is the highest year-on-year increase in construction prices since August 1970.
Real estate price development: Berlin’s special position
The Berlin 2022/2023 real estate market report by the expert committee highlights the special features of the real estate market in Berlin. After prices had caught up for decades, there were slight declines in the capital for the first time in 2022/23. The median purchase price for a condominium in Berlin in 2022 was around €5,330/m² (existing stock) – after €4,735/m² in 2020/21, which was +6% compared to the previous year. In 2023, there was then a decline of around 4%, followed by a further -3% in 2024. Currently (2025), the average price of an existing apartment in Berlin is around €5,130/m². This means that Berlin has survived the majority of the correction – this figure still corresponds to an increase of 18% compared to 2020 and is only around 4% below the absolute peak of 2022. The Berlin Tenants’ Association nevertheless complains about the policy: “For an 85 square meter condominium, around 15 annual net salaries must be raised by an average-earning household. (…) 45% of Berlin households only have a monthly income of less than 2,000 euros.” This situation has been exacerbated by the rise in interest rates – many average households are still unable to afford home ownership in Berlin, despite a slight fall in prices, as financing rates have risen sharply.
At present, demand is increasingly shifting to the surrounding areas of Berlin, primarily to regions with good transport links to the capital. The surrounding areas are benefiting from relatively lower prices and the trend towards working from home, which allows a little more distance from the city. For example, districts such as Dahme-Spreewald and Oberhavel in Brandenburg have recently recorded double-digit growth rates in demand.
Compared to other major German cities, the real estate market in Berlin is still characterized by the extraordinary development following reunification. While cities such as Munich, Frankfurt and Hamburg were able to develop continuously for decades, Berlin was catapulted out of its previously stagnant existence. This extraordinary momentum is still reflected in the figures today – for example in the high annual growth rates between 2015 and 2021, which averaged 12-14% per year for condominiums. Berlin has thus caught up with cities such as Cologne or Düsseldorf in terms of price within a decade, although the absolute level (around €5,000-6,000/m² on average) is still below Munich or Frankfurt.
This special position is also reflected in the demand for real estate listings. According to ImmobilienScout24, a few years ago there were significantly more inquiries per listing in Berlin than the national average: In one week, there were around two inquiries for a new-build house on offer (one in Germany), five inquiries for an existing house (Germany: 4), one inquiry for a new-build condominium (also one nationwide) and three inquiries for an existing condominium (5 in Germany). In the meantime, this ratio has relativized somewhat – the sharp rise in interest rates has also reduced the number of prospective buyers in Berlin, meaning that the competition per advertisement is no longer quite so fierce. Nevertheless, Berlin remains a magnet for demand, especially for properties in the affordable segment and in trendy districts.
Rental and price momentum in metropolitan areas is slowing
While the price momentum on the housing markets in the major cities has cooled recently, some of the surrounding areas are now following suit. In terms of rents, for example, some previously cheaper cities recorded higher growth than the expensive major cities in 2023. According to JLL Research, Leipzig was already the only market among the Big 8 cities in 2021 to achieve higher rental growth than in a five-year comparison. In Berlin, the comparatively large increase of +4.1% (to €13.85/m²/month) in 2021 was mainly due to the lifting of the rent cap. Since then, the situation has normalized somewhat: in 2022, rent levels in some expensive cities stagnated temporarily, but then rose again in 2023 – by around 3% on average across Germany. Peripheral locations are continuing to catch up, as demand is increasingly shifting to the rental market due to a lack of alternatives to buy.
Example rent level 2023/2024 (selection): Munich remains the most expensive major city with a median of around €21/m², followed by Frankfurt am Main (~€16/m²) and Stuttgart (~€15/m²). Berlin recorded asking rents of around €16/m² (stock, mid-2025), while Hamburg and Düsseldorf were around €13-14/m². Leipzig, as an up-and-coming location in eastern Germany, averaged ~€9-10/m², with an above-average percentage increase in recent years. These figures illustrate this: The rental price momentum of recent years in the Big 8 has slowed somewhat, while cheaper cities and surrounding districts are catching up.
Compared to other major German cities, the real estate market in Berlin is still characterized by the extraordinary development following reunification. While cities such as Munich, Frankfurt and Hamburg were able to develop continuously for decades, Berlin was catapulted out of its previously stagnant existence. This extraordinary momentum is still reflected in the figures today – for example in the high annual growth rates between 2015 and 2021, which averaged 12-14% per year for condominiums. Berlin has thus caught up with cities such as Cologne or Düsseldorf in terms of price within a decade, although the absolute level (around €5,000-6,000/m² on average) is still below Munich or Frankfurt.
This special position is also reflected in the demand for real estate listings. According to ImmobilienScout24, a few years ago there were significantly more inquiries per listing in Berlin than the national average: In one week, there were around two inquiries for a new-build house on offer (one in Germany), five inquiries for an existing house (Germany: 4), one inquiry for a new-build condominium (also one nationwide) and three inquiries for an existing condominium (5 in Germany). In the meantime, this ratio has relativized somewhat – the sharp rise in interest rates has also reduced the number of prospective buyers in Berlin, meaning that the competition per advertisement is no longer quite so fierce. Nevertheless, Berlin remains a magnet for demand, especially for properties in the affordable segment and in trendy districts.
| City | Increase in rents in % | Rent/m²/month |
| Munich | 1,7 | 20,90 |
| Cologne | 3,9 | 13,35 |
| Frankfurt | -3,1 | 15,50 |
| Düsseldorf | 0,0 | 12,00 |
| Stuttgart | 0,0 | 15,00 |
| Berlin | 4,1 | 13,85 |
| Hamburg | 3,8 | 13,55 |
| Leipzig | 5,3 | 7,90 |
(Source: JLL Research, asking rents Q2 / Q1 -2021)
Purchase prices for condominiums in the Big 8 cities also continued to rise in 2021, but momentum slowed in the top segment. In 2021, purchase prices still rose by an average of 11.4 % compared to the five-year average, and by as much as 12.5 % in the independent cities outside the Big 8. Since 2022, this picture has reversed: the most expensive metropolitan areas recorded the sharpest declines, while many medium-sized cities saw smaller corrections. Berlin, for example, recorded an increase of 11.6% in 2021 (purchase price ~ €5,560/m²) – one of the highest increases – whereas in 2023 it was down by around 4%. Leipzig was the frontrunner in 2021 with +20.2% (to a still moderate €3,100/m²); the price level there remained relatively stable until 2023, as it was lower from the outset. Munich was at almost €9,750/m² in 2021 (+12.7%), but also suffered slight reductions in 2023. Overall, the price dynamics of the periphery are catching up with the metropolitan areas: In some attractive surrounding regions, prices are still rising slightly or stagnating in some cases, while expensive metropolitan locations are falling slightly – a sign of an alignment of market forces.
| City | ETW prices Increase in % | Purchase price in Euro/m² |
| Leipzig | 20,2 | 3.100 |
| Düsseldorf | 14,0 | 5.060 |
| Munich | 12,7 | 9.750 |
| Cologne | 12,6 | 5.000 |
| >> Berlin | 11,6 | 5.560 |
| Hamburg | 7,8 | 6.210 |
| Stuttgart | 7,2 | 5.330 |
| Frankfurt | 5,3 | 6.900 |
(Source: JLL Research)
Outlook for the future of real estate prices
The price momentum of condominiums and houses for sale in Germany has slowed significantly overall. Following the historic price declines in 2023 (no increase in the bulwiengesa overall index for the first time in 18 years), current indicators point to a stabilization. Prices have been rising again slightly in some places since the end of 2024. ImmoScout24 reported the first quarterly price increase in two years for mid-2024 (+1.3% from Q1 to Q2 2024). Nationwide, DZ Bank, for example, is forecasting only a moderate decline of around -1 to -2% for 2024, after previously expecting larger falls. Many experts believe that the market has bottomed out and that a phase of sideways movement or slight recovery is imminent – albeit without rapid price increases.
The key factor will be the development of interest rates. As long as interest rates remain significantly higher than in the 2010s, demand for real estate is likely to remain subdued. High inflation in 2022/2023 has prompted the European Central Bank (ECB) to tighten its monetary policy; the key interest rate will be in the region of 4% in 2025 – a level that will make financing noticeably more expensive. Higher interest rates restrict the affordability of real estate for broad sections of the population and therefore act as a brake on price development in the medium term. However, if inflation declines and the ECB lowers interest rates in the future (some forecasts expect a slight interest rate cut from 2024/25), this could attract new groups of buyers and support prices.
At the same time, structural factors are driving the market: the political goals of climate neutrality require cost-intensive new builds and energy-efficient refurbishments of existing properties. New construction remains expensive and the supply deficit – particularly in metropolitan areas – is increasing as too few apartments are being completed. Bulwiengesa therefore expects that there will be no dramatic further price declines after the nominal price freeze in 2023. Due to the shortage of housing and continued high demand, prices are expected to remain stable or rise slightly as soon as the uncertainty on the capital market subsides. However, growth is likely to remain well below the double-digit rates of the past. The previous “18 years of growth” are history – they will be replaced by a more balanced market with regional differences.
Overall, future price trends depend on many factors: Interest rates, income, construction costs, regulation (e.g. possible new subsidy programs) and demographic trends. Although Germany is benefiting from immigration and rising household numbers, without sufficient new construction this will continue to drive up rents in particular. It can already be observed that investors are increasingly pushing into the rental market and – despite high interest rates – see investments in residential properties for rent as profitable in the long term. For owner-occupiers, on the other hand, 2025 will remain a challenging year in which careful calculations will have to be made.
Conclusion: Real estate prices in Berlin and Germany will continue to rise in the long term, but in a more subdued and differentiated manner. After a phase of overheating and correction, the market is stabilizing. Anyone investing in real estate should keep an eye on both the major trends (interest rates, construction policy, energy costs) and local conditions. Good locations with a genuine shortage are likely to retain or increase in value, while overpriced properties without corresponding demand are now more difficult to sell.
Legal notice:
This article does not constitute tax or legal advice in individual cases. Please consult a lawyer and/or tax advisor to clarify the facts of your specific individual case.
Table of contents
Click on a section to jump directly to it.
- Berlin – city of opportunities
- Prices for residential real estate in Germany until 2025
- Real estate market report 2023 of the expert committees
- Danger of real estate price bubbles – development confirms the warnings
- empirica real estate price index: trend reversal after highs
- Highest increase in construction prices since 1970
- Real estate price development: Berlin’s special position
- Rental and price momentum in metropolitan areas is slowing
- Outlook for the future of real estate prices
