Geographically, Germany lies in the heart of Europe and its central location makes it a key hub for trade, culture, and travel. Its large and stable economy, excellent public services, healthcare, education, public transportation, and infrastructure make it a desirable place for expats. As a matter of fact, two German cities (Munich at #3 and Berlin at #4) ranked in the top ten of AIRINC's Global 150 Cities Index for 2024.
AIRINC Housing Data
The AIRINC Housing team sets rents for almost 100 German host locations each year.
Housing Inflation
From May 2023 to May 2024, rents for new leases increased by an average of 7.5% countrywide. The ten largest cities, detailed below, saw a slightly higher annual increase on average, with rents up 9% for the year.
- Berlin 1.11
- Cologne 1.09
- Dortmund 1.08
- Düsseldorf 1.09
- Essen 1.08
- Frankfurt 1.07
- Hamburg 1.12
- Leipzig 1.08
- Munich 1.07
- Stuttgart 1.11
Reasons for Inflation
Rents in Germany have been rising due to a lack of supply and strong demand.
- Low turnover: The average German tenancy is 11 years. Compare this to the US and the UK where average tenancy is 2.5 years.
- Strong competition: More than 55% of Germans, at all economic levels, are renters. Compare this to the US and UK where only 37% and 38% of individuals rent.
- Low Supply: High labor, materials, and finance costs have cooled investments in real estate and new construction is not keeping up with demand.
- Regulations: Strong tenant protections against rent increases and evictions tend to make new leases more expensive.
Specifics of the German Rental market
- An unfurnished unit could be delivered without kitchen appliances or cabinetry or bedrooms without wardrobes. A prospective tenant should always ask what will stay with the unit.
- The advertised rent will be expressed as “cold rent,” but other monthly costs will be itemized in the lease and tenants often paid these directly to the owner. These may include heat, water/sewer, and shared services, such as a gardener.
- Expect to find a list of “House Rules.” These rules are intended to promote order and respect among tenants and typically cover various aspects of communal living. In general, they will include quiet hours, pet policies, and instructions for garbage and recycling. Some lists are very detailed and extensive and may include a schedule for using the washing machine, practicing musical instruments, children’s outdoor play, and a list of cleaning and maintenance chores which may be assigned by the landlord.
To ensure a smooth house hunt, it is advisable to:
- Allow an average of six to eight weeks to secure a rental.
- Have all necessary paperwork (bank accounts, proof of income, visa, or work permit) ready before starting the search.
- As landlords must pay any brokerage fees associated with listing their property, some owners are offering their units directly to prospective tenants through word of mouth or local classified ads either online or in papers. There are lots of property websites too, some more reliable than others. Ask colleagues for leads and watch out for “For Rent” signs in neighborhoods of interest ("Zu Vermieten,” in German). Work with reputable Destination Service Providers or professional real estate agents who may have early access to listings and can help navigate the tight market.
AIRINCer Mira our German country lead commented: "The quality of housing does not tend to be the issue in most German cities. But demand exceeds supply, competition is fierce, and potential tenants who don’t know the system or don’t speak the language can find the process extremely challenging."
For the latest rent budgets, check with your AIRINC client representative. The housing team will continue to monitor the market through the next survey cycle in November 2024.