Published on and written by Cyril Jarnias
Long overlooked, Germany’s second home market is stepping out of the shadows. It benefits from both the structural strength of German real estate, the rise of remote work, the upgrade of domestic tourism, and a growing need to place savings in tangible assets. However, it also faces a strict regulatory environment, a chronic housing shortage, and public opinion increasingly sensitive to the negative effects of holiday homes on local markets.
Today, a second home serves several purposes: it functions as a weekend house, can become a future retirement home, generates income through seasonal rentals, and serves as a tool for wealth transfer.
A secondary market built on a very solid real estate foundation
To understand the second home market in Germany, we must first look at the overall housing context. The German residential real estate market is emerging from a correction phase: after more than ten years of almost uninterrupted growth, prices fell by about 13% between early 2022 and mid-2024. This decline ended a cycle fueled by ultra-low interest rates, urbanization, and strong investment demand.
The average price for existing apartments in Q3 2025 reached €3,499/m² nationally, up 4.4% year-on-year.
Forecasts for the coming years outline a scenario of moderate growth, without speculative overheating: around 3.5% in 2025, 3.2% in 2026, and about 2.8% in 2027 according to a synthesis of projections from Reuters, LBBW, and other analysis firms. Even in 2027, prices are expected to remain slightly below their nominal 2022 peak and significantly lower in real terms, after deducting inflation.
This context is decisive for second homes. It means that buyers of vacation homes or “Zweitwohnsitz” are no longer facing an overheated market, but an environment of slow appreciation, driven by robust fundamentals: a structurally insufficient supply, dynamic urban demographics, and the status of German real estate as a safe-haven asset, particularly for international investors.
Why Germany attracts second home buyers
German real estate combines several characteristics that make it a natural terrain for second homes, whether for German or foreign buyers.
The country is considered one of the most stable and transparent markets in Europe. The legal framework is solid, property rights are well protected, and, notably, there are no principle-based restrictions for foreign buyers: whether they are EU citizens or nationals of third countries, non-residents can acquire apartments, houses, buildings, or land under the same conditions as a German citizen. However, purchasing real estate does not grant a right to a residence permit or facilitated access to citizenship: property ownership and immigration remain two separate worlds.
Homeownership rate in Germany, well below the European average of over 65%.
Additionally, there are incentivizing tax elements for a long-term strategy: capital gains are exempt after ten years of ownership (or after just three years if the property served as a primary residence), which favors the generational purchase of second homes envisioned over a horizon of several decades.
Demand fueled by multiple uses
In this context, purchasing a second home meets several logics that are often combined:
In Germany, a second home fulfills several roles: it serves as a leisure retreat in sought-after regions like the Bavarian Alps, the North Sea and Baltic Sea coasts, or around the large lakes in the South. It can also be considered as a future retirement home, a European trend where nearly a quarter of owners plan to live there in retirement. In terms of wealth, it becomes a tax optimization tool, with some households buying a larger property to live in and rent out the old one, or acquiring a rental property to pass on to children. Finally, it constitutes an investment vehicle at the intersection of personal use and yield, particularly through partial seasonal rentals.
The line between a “personal use” second home and a pure investment is thin: to be considered a second home in the banking or tax sense under many schemes, the property must generally be occupied by the owner for at least two weeks per year, not be rented out for more than half the year, and be located a certain distance from the primary residence. Beyond that, it often shifts into the “investment property” category with sometimes stricter financing and tax conditions.
Second homes and the vacation rental boom
The evolution of the vacation rental market is a good measure of the dynamism of second homes in Germany. The furnished tourist accommodation segment is booming, driven by a fundamental trend: travelers’ growing preference for unique accommodations integrated into their environment, rather than standardized hotels.
In 2023, vacation rentals in Germany generated approximately $4.3 billion in revenue. Projections estimate $5.5 billion by 2030, representing an average annual growth rate of 3.6%. Germany already accounts for nearly 5% of the global seasonal rental market, with about 310,500 properties listed on platforms in 2019, placing it among the top five European countries in terms of furnished tourist accommodation supply.
The ‘Home’ segment generates nearly half of the sector’s revenue, ahead of apartments and resorts. With an average price of $205 per night and an annual availability rate of about 60%, this segment shows significant occupancy even off-season.
The most sought-after regions for this type of second home are clearly identified: the North Sea islands (Sylt, Juist, Norderney), Baltic Sea resorts (Rügen, Usedom), Bavarian lakes (Tegernsee, Chiemsee, Starnberger See), Lake Constance, the Bavarian Alps, but also certain urban centers like Berlin, Munich, Hamburg, or Cologne, where seasonal rentals coexist with the traditional rental market.
To measure the extent of the “vacation” premium, one only needs to look at the price per square meter in these hotspots.
Numerical overview of some second home markets
The table below summarizes some price ranges in the main vacation regions, based on data from agencies specializing in vacation homes:
| Region / Location | Property Type | Indicative Price Range |
|---|---|---|
| Sylt (North Sea) | Vacation Apartments / Houses | €8,000 to €22,000/m² (up to €29M for exceptional properties) |
| Juist (North Sea) | Vacation Apartments | €8,000 to €14,000/m² (houses €1.8M to €3.5M) |
| Norderney (North Sea) | Vacation Apartments | cases observed up to €29,500/m² |
| Rügen (Baltic Sea) | Vacation Apartments / Houses | €4,700 to €12,800/m², houses €500,000 to €3,300,000 |
| Usedom (Baltic Sea) | Vacation Houses | €4,000 to €10,000/m², houses €400,000 to €3,000,000 |
| Tegernsee Lake | Vacation Apartments | €18,000 to €23,000/m² |
| Lake Constance | Apartments / Houses | €5,000 to €15,000/m² |
| Munich Region (overall) | Existing Apartments (city) | ~€8,580/m² average (Q3 2025) |
A dual contrast emerges. On one hand, prices in the most upscale seaside and lakeside resorts (Sylt, Tegernsee, Starnberger See) rival those in the central neighborhoods of Munich or Hamburg, with peaks well above €20,000/m². On the other hand, so-called “B-cities” markets like Leipzig, Nuremberg, or Magdeburg remain very affordable, with apartment prices around €3,000 to €3,500/m² and rental yields above 4%, making them prime locations for second homes with high yield potential.
Seasonal rentals: an engine of profitability… and tensions
In highly touristic areas, a well-located vacation house can often yield more than a year-round rental. In Berlin, an apartment operated for short-term rental can generate €100 to €150 per night, while chalets in Bavarian ski resorts easily exceed €200 per night in high season. With a good occupancy rate, the net profitability, after deducting management, maintenance, and financing costs, can significantly exceed that of a standard lease.
Only 251,937 new homes were delivered in France in 2024, a drop of over 14% in one year.
This chronic underproduction, combined with population growth (over 3% in the last decade) and the concentration of demand in large metropolitan areas and their suburbs, maintains a deep imbalance between supply and demand. In this context, every apartment diverted from the residential market for tourist rentals becomes politically sensitive. Many municipalities are responding by strictly regulating short-term rentals and taxing second homes.
Remote work, a new accelerator for the second home market
The rise of remote work plays a decisive role in the reshaping of the market. In 2019, barely 12.9% of employed people in Germany worked at least partially from home; by 2023, it was 23.5%, almost double. Among highly skilled professions and managers, nearly one in two now practices working from home at least part of the week.
Despite a preference from many leaders for a return to the office, the dominant trend is the adoption of hybrid models. Major companies like SAP and Volkswagen are instituting a mandatory office presence of a few days per week, while allowing several days of remote work. Studies indicate that employees place great value on this flexibility, estimating that it brings a level of satisfaction equivalent to a pay raise.
This evolution has very concrete effects on the second home market:
Remote work modifies residential behaviors by expanding acceptable geographical zones around major employment hubs, allowing workers to settle further away in houses with an office and garden. It values properties offering quality of life, reliable internet connection, quiet, and sufficient space for work. Finally, it de-seasonalizes the use of second homes, with extended stays for working remotely, especially on Mondays or Fridays.
The parallel with other European countries is instructive: in Spain, Portugal, or Italy, the rise of remote work has fueled a wave of second home purchases by mobile workers seeking a mild climate and lower cost of living. In Germany, the movement is more internal: the preference for domestic vacations has strengthened, and affluent households concentrate their purchases in coastal, mountain, or lake regions, or in less densely built but attractive hinterlands.
A complex regulatory environment for second homes
While access to ownership is legally simple, the day-to-day life of a second home owner is governed by a set of rules that are risky to ignore.
Acquisition taxes and transaction costs
Purchasing a property in Germany entails significant costs, which heavily impact the profitability calculation of a second home:
| Cost Item | Typical Range |
|---|---|
| Property Transfer Tax (Grunderwerbsteuer) | 3.5% to 6.5% of price depending on the federal state |
| Notary + Land Registry Entry | 1.5% to 2.0% |
| Real Estate Agent Commission | 3% to 7% (often shared) |
| Other (appraisal, translations, etc.) | ~0.5% to 1% |
| Total Additional Costs | Approx. 8% to 12% of purchase price |
In Berlin, the property transfer tax reaches 6%, compared to 3.5% in Bavaria, for example. On an €800,000 vacation home, one could spend between €40,000 and €75,000 in additional costs, which necessitates aiming for a long holding horizon to amortize these expenses.
Most banks also require a substantial personal contribution. For a first purchase, it is common to need to put down 20 to 30% of the price, plus the 8 to 12% in non-financeable fees. For a second acquisition, institutions become more cautious: they often cap monthly payments at 35-40% of monthly income and require a stable income history. Non-residents or non-EU nationals usually need to provide a 30 to 40% down payment, or even more.
Average rate for 10-year fixed mortgage loans observed in August 2025.
Second Home Tax (Zweitwohnungsteuer)
A German particularity that must not be overlooked is the Zweitwohnungsteuer, a municipal tax on second homes. Many cities and tourist resorts levy it on anyone with an additional dwelling, even for partial or seasonal use, as long as it is used for private purposes.
The calculation method varies by municipality but most often relies on the theoretical annual rent (or a reference rent) to which a rate typically between 7% and 20% is applied. Some indicative figures:
| City / Region | Indicated Zweitwohnungsteuer Rate |
|---|---|
| Munich | 18% |
| Berlin | 15% to 20% (rate tripled in 2019) |
| Hambourg | 8% |
| Sylt | 6% |
| Jena | 0% (exemption) |
This tax is in addition to ordinary taxation (income tax, property tax) and must be declared specifically each year. Exemptions exist, notably for married people who maintain their primary family home and occupy the second residence for professional reasons (dual household), or for low-income students in some regions. However, an owner who keeps a pied-à-terre in Berlin for weekends should expect an annual bill.
Failing to declare one’s second home status or omitting registration with the residents’ registration office (Einwohnermeldeamt) constitutes an administrative offense punishable by a fine. Prolonged non-payment can furthermore be classified as tax fraud.
Strict regulation of short-term rentals
In major cities and tourist hotspots, the regulation of vacation rentals has become very tight. Municipalities typically impose:
– an obligation to register as a furnished tourist accommodation;
– rental duration limits (e.g., a maximum number of days per year without a specific permit, or an obligation to rent only part of the dwelling);
– compliance with social mix objectives or quotas of tourist accommodations per neighborhood;
– payment of tourist taxes and, in some cases, anti-vacancy rules to prevent homes from remaining empty.
Berlin, for example, strongly limits the conversion of rental apartments into tourist furnished accommodations in high-demand neighborhoods. Munich applies a comparable policy, with strictly regulated temporary use permits beyond a few weeks of rental per year.
For a second home owner, these rules condition the strategy for monetizing the property: an almost exclusively personal use will be little affected, but a model heavily oriented toward Airbnb requires constant regulatory monitoring and, often, the use of professional managers to remain compliant.
Where and how to buy a second home: the geography of opportunities
Behind the image of postcard islands and lakes lies a much more nuanced geography, structured around two main axes: prestige destinations, where the entry price is very high but the heritage value is extremely solid, and B/C-tier cities or growing hinterlands, where the price/yield combination remains attractive.
Major urban hubs: hybrid use and sustained appreciation
The “Big 8” – Berlin, Hamburg, Munich, Cologne, Frankfurt, Düsseldorf, Stuttgart, Leipzig – concentrate a good share of international interest. For an urban second home that combines personal enjoyment and rental prospects (classic or seasonal depending on local rules), these metropolises offer a liquidity/security pairing that is hard to match.
Price data for apartments in Q3 2025 illustrates the extent of the disparities between these cities:
| City | Existing Apartments (€/m²) | Annual Variation | New (€/m²) | Annual Variation |
|---|---|---|---|---|
| Berlin | 5,533 | +3.3% | 8,352 | +2.7% |
| Hamburg | 5,743 | +2.4% | 8,859 | +7.0% |
| Munich | 8,580 | +4.6% | 11,514 | -0.7% |
| Cologne | 4,961 | +6.8% | 7,116 | +3.4% |
| Frankfurt | 6,079 | +2.1% | 8,170 | -3.9% |
| Stuttgart | 4,565 | +1.5% | 8,243 | -4.1% |
| Düsseldorf | 4,833 | +7.8% | 7,518 | 0.0% |
| Leipzig | 3,033 | +2.7% | 5,200 | 0.0% |
Munich remains by far the most expensive market, while Leipzig appears as one of the most affordable options, including for a rental second home project. Market rents follow the same hierarchy: Munich has a median rent of about €24.1/m², Berlin €19.5/m², and Leipzig just over €11/m².
In large cities, a second home can serve as a pied-à-terre for business travel, sometimes qualifying as a tax-deductible dual household if it is near the workplace. It can also be a pied-à-terre for leisure, later converted into student housing or a primary residence for a child. Gross rental yields there are generally 3% to 4%, with peaks exceeding 4% in cities like Stuttgart, Leipzig, or Berlin.
B-cities and hinterlands: “smart” second homes
The map of opportunities is not limited to major metropolises. Many medium-sized cities – Leipzig, Dresden, Nuremberg, Magdeburg, Jena, Potsdam, Erfurt, Regensburg, Freiburg – combine demographic growth, still reasonable prices, and rising rental demand. They are often cited in market studies as “Growth Cities” where one can buy a second home that is not just a vacation spot, but also an asset generating recurring income, in a dynamic urban environment.
The city of Leipzig experienced population growth of over 10% between 2014 and 2021. The average price for existing real estate there is about €3,000/m², with gross yields potentially exceeding 4%. An investor can acquire a spacious apartment there for the price of a studio in Munich, and opt for a seasonal or long-term rental strategy, especially targeting students or young professionals, to optimize profitability.
In the South, cities like Freiburg or Regensburg, close to mountains and natural sites, combine high quality of life and a strong green positioning. Freiburg, in particular, has established itself as a laboratory for sustainable urban planning, with entire neighborhoods of energy-positive houses and a goal of 100% renewable energy by 2035. A second home there takes the form of an ultra-energy-efficient dwelling, likely to appeal to both family use and a demanding rental clientele.
Financing your second home: equity, cash-out, and dedicated loans
For a household that already owns its primary residence, the key to a second purchase often lies in leveraging existing equity. The German banking system is structured around a cautious but flexible logic: banks frequently agree to lend up to 80% of a property’s value, with a first or second mortgage, if the overall financial situation remains solid.
Two main schemes emerge for financing a second home:
Cash-out refinancing allows an owner, whose house is worth €600,000 with €250,000 of remaining principal, to renegotiate their loan and free up to €230,000 in cash (at an 80% loan-to-value ratio). In parallel, a fully paid-off house worth €300,000 can be used as collateral to obtain a loan of €240,000 (80% of its value), serving as security to improve the terms of a loan for purchasing a second home (lower rates, reduced monthly payments).
These structures are sometimes combined with preferential-rate loans from KfW (the public development bank), primarily aimed at primary residences and energy efficiency, but which can indirectly free up financing capacity for a second purchase.
Foreign buyers can also obtain financing from German banks, but with stricter equity requirements, especially if they are not tax residents or salaried employees in Germany. For a non-resident, financing rarely exceeds 60% of the property’s value, with the remainder needing to come from personal funds.
Taxation of second homes: between optimization and constraints
From a tax perspective, a second home occupies an intermediate position between a primary residence and an investment property.
Dual household for work: a special favorable case
When a taxpayer maintains a residence near their workplace that they could not reasonably commute to daily from their primary residence, they may benefit from the “double Haushaltsführung” (dual household) regime. Under certain conditions – notably that the primary home remains the center of life (family, friends, financial contribution to household expenses) – they can deduct from their taxable income:
Overview of the various financial aids available to facilitate relocation related to a job transfer.
Coverage of rent and utilities for the residence near the workplace, up to €1,000 per month.
Reimbursement for a weekly round trip to the primary home, calculated at a flat rate of €0.30 per kilometer.
Coverage of moving expenses and certain installation costs related to the new residence.
Payment of a flat-rate allowance for meals during the first three months following the move.
In this case, the second home tax itself can be accounted for as deductible professional expenses. For a buyer considering a second home as a residence near work rather than a pure vacation house, the tax benefit is far from negligible.
Rental income and capital gains
When the second home is rented – seasonally or long-term – the income is taxed at the progressive income tax rate (approx. 14% to 45%, plus solidarity surcharge). In return, a broad range of expenses is deductible:
A rental investment involves several recurring and one-time expenses to factor into its profitability calculation. These notably include loan interest payments, management and agency fees, repair and maintenance work for the property, building depreciation (generally estimated at 2% per year for existing properties, sometimes more for recent constructions), as well as local taxes like property tax and the second home tax.
For non-residents who own a second home in Germany and rent it out, the tax filing obligation is the same. Most double taxation treaties grant Germany the primary right to tax real estate income located within its territory.
In case of resale, the capital gain is taxable if the holding period is less than ten years, unless the property was occupied as a primary residence for at least two years. After ten years, the sale is exempt from any capital gains tax, which encourages keeping a second home long-term, even when it has become primarily a rental asset.
The rise of the second home market is not just about numbers: it also clashes with increasingly central environmental and social considerations.
Maximum KfW loan amount per home for energy-efficient renovation in Germany.
In the vacation home segment, this sustainability requirement translates into the emergence of very specific niches: certified wooden cabins, energy-positive houses, eco-lodges integrated into the landscape. Many sustainable-labeled second home offerings rely on eco-friendly materials, near-energy self-sufficiency, and strong integration into the local fabric (sourcing regional products, short supply chains, soft mobility).
In Germany, particularly in the North Sea and Baltic Sea resorts and on some Bavarian lakes, the price surge due to second homes puts pressure on the local population and generates resentment. To limit these effects, tools like regulations against deliberate vacancy, limits on tourist rental days, and a tax on second homes are being implemented.
This evolution reinforces a trend already observed by major specialized agencies: a growing portion of second home buyers in Germany are now seeking quieter places, away from the most saturated resorts. On the Baltic coast, for example, interest is shifting towards the hinterland, where prices are lower, tourist pressure is less, and political resistance to building new vacation homes is somewhat weaker.
Toward a more professional and selective second home market
Over the years, the German second home market is becoming more professional. The growth of the vacation rental segment attracts specialized managers, service platforms, and more structured private or institutional investors. Family offices and international investors are complementing their traditional residential portfolios with vacation assets in the most sought-after areas, benefiting from a market still far from the saturation seen in some Mediterranean countries.
This is the average percentage of rental income that full management of a second home by a specialized agency costs.
But this movement comes with stronger selection. The combination of sluggish new construction, stricter energy standards, restrictive municipal policies on second homes, and rising transaction costs requires a more analytical approach than before. Prospective buyers can no longer simply rely on almost automatic price increases: they must integrate local specificities (taxes, rental rules, social acceptability), the property’s energy profile, its position in the urban hierarchy (secure A-city or higher-yield B-city) and, of course, their own financing constraints.
Despite a changing context, Germany retains strong assets for second home investment: a predictable legal framework, a robust economy, strong tourist appeal, and a deep rental market (over half of households are tenants). For investors ready to commit for the long term, navigate sometimes complex taxation, and respect local rules, opportunities exist across various segments: weekend apartments (e.g., Leipzig), passive houses (e.g., Black Forest), lakefront chalets (e.g., Bavaria), or mixed-use pieds-à-terre (e.g., Berlin).
The time is no longer for quick speculation, but for the patient construction of a vacation property portfolio aligned with the major demographic and environmental transitions shaping German real estate.
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Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
