Published on and written by Cyril Jarnias
The German real estate market is undergoing a cautious recovery following the sharp correction of 2022‑2023. Prices are rising slightly again, rents continue to climb, and the housing shortage is worsening, especially in major cities. In this tense landscape, price gaps between cities are widening, and buying or investment strategies must be tailored to each local market.
An analysis of price levels in Germany can be established based on recent data for the twelve main cities (Berlin, Munich, Hamburg, Frankfurt, Cologne, Stuttgart, Düsseldorf, Leipzig, Dortmund, Essen, Nuremberg, Dresden), with a particularly detailed focus on the capital Berlin.
A German market in recovery, but far from its peak
After a decade of almost uninterrupted growth fueled by low interest rates, urbanization, and an influx of investors, German real estate underwent a marked correction in 2022 and 2023. Nominal residential property prices fell by about 4% in 2022 and then by over 7% in 2023, with real double-digit declines once inflation was taken into account.
Since 2024, the trend has reversed. The national house price index rose by 3.18% year-on-year in the second quarter of 2025, representing a real increase of about 1.1%. According to the VALUE database, the average price for an existing apartment is now around €3,499/m², and for a new apartment €5,570/m².
This is the anticipated annual growth rate for property prices until 2026.
This recovery is occurring in a context of a chronic housing shortage. Germany would need about 320,000 new homes per year between 2023 and 2030, but only around 252,000 units were completed in 2024, and building permits fell again by about 17%. The Ifo Institute does not foresee a slight recovery in construction starts until 2027.
In this context, major cities are clearly standing out from the rest of the country, both in terms of prices and the dynamic of rents and rental yields.
Overview of major cities: from very expensive Munich to affordable Dortmund and Essen
The most recent data allows for a precise comparison of price levels in the main urban areas. The table below summarizes the average values for existing and new apartments in the third quarter of 2025.
Average apartment prices in major cities (Q3 2025)
| City | Existing Apartments (€/m²) | Annual Change | New Apartments (€/m²) | Annual Change |
|---|---|---|---|---|
| Munich | 8,580 | +4.6% | 11,514 | -0.7% |
| Frankfurt | 6,079 | +2.1% | 8,170 | -3.9% |
| Hamburg | 5,743 | +2.4% | 8,859 | +7.0% |
| Berlin | 5,533 | +3.3% | 8,352 | +2.7% |
| Cologne | 4,961 | +6.8% | 7,116 | +3.4% |
| 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% |
| Essen | 2,562 | +8.1% | 5,405 | -1.7% |
| Dortmund | 2,541 | +4.4% | 4,310 | +1.5% |
Munich remains by far the most expensive market, with prices exceeding €11,500/m² for new builds and approaching €8,600/m² for existing properties. Berlin, Hamburg, and Frankfurt form a second tier, around €5,500 to €6,100/m² for existing properties, while Cologne, Stuttgart, and Düsseldorf form an intermediate level between €4,500 and €5,000/m².
At the other end of the spectrum, Leipzig, Dortmund, and Essen offer significantly more affordable levels, often below €3,000/m² for existing apartments. These gaps mechanically translate into higher rental yields in these cheaper cities, as shown by the rental analysis.
Rents and yields: very tight markets in the metropolises
On the rental side, the gap between metropolises is just as pronounced. The asking rents recorded in the first half of 2025 confirm that Munich leads the ranking, closely followed by Berlin and Frankfurt.
Apartment rents in major cities (H1 2025)
| City | Median Rent (€/m²/month) | Annual Change |
|---|---|---|
| Munich | 24.11 | +5.0% |
| Berlin | 19.49 | -0.1% |
| Frankfurt | 19.00 | +7.2% |
| Hamburg | 17.79 | +18.6% |
| Stuttgart | 16.92 | +4.8% |
| Cologne | 16.27 | +8.5% |
| Düsseldorf | 15.05 | +8.2% |
| Leipzig | 11.01 | +11.4% |
In the most expensive cities to buy (Munich, Frankfurt, Hamburg, Berlin), rents are also very high but do not completely compensate for the price levels. Average gross yields hover around 3.5% nationally, with significant differences between markets.
Highest gross rental yield in September 2025, observed in Stuttgart among major German cities.
Leipzig illustrates this compromise well: rents there are modest in absolute value (about €11/m²) but acquisition prices remain sufficiently contained to generate gross yields around 4 to 5% in some neighborhoods.
Berlin: an emblematic market, between rental tension and contrasting prices
Looking more closely at Berlin, we find both the major national trends and very distinct local specificities.
Slightly rising purchase prices, but real purchasing power in decline
In 2026, the median price for condominiums in the capital is around €5,434/m², with an average price of about €4,819/m². An analysis places these values in a range of €4,800 to €5,400/m² for the vast majority of apartments, with a nominal increase of about 1% compared to the previous year. Considering inflation close to 2.5%, this means real values have slightly declined.
Over a decade, however, Berlin prices have jumped about 60% in nominal terms. After deducting inflation, the real gain is around 25%. The entry ticket for a standard 70 m² apartment is now around €370,000 to €380,000, and 80% of residential properties are in a range of €224,000 to €476,000.
The gap between asking price and final price remains limited: transactions are concluded on average 5% below the listed prices, with steeper discounts (up to 10%) for atypical or overvalued properties, and almost nonexistent for well-positioned apartments in sought-after neighborhoods.
The Berlin real estate market presents a very wide price range. Small studios (30-40 m²) in outlying neighborhoods like Neu-Hohenschönhausen or Marzahn can be negotiated for between €90,000 and €160,000. At the opposite end, a renovated penthouse in Dahlem or a villa in Grunewald easily reaches €1.8 to €3 million, with per-square-meter prices of €7,000 to €9,500, or even more for exceptional properties.
Berlin compared to other major cities
On a national scale, Berlin is no longer the “bargain” it was ten years ago, but it remains more affordable than Munich or Frankfurt, while approaching Hamburg. National data places existing Berlin apartments at around €5,533/m² and new ones at €8,352/m², levels close to those of Hamburg but lower than Frankfurt for existing properties and higher than Cologne.
Compared to national averages (€3,499/m² for existing, €5,570/m² for new), Berlin commands a significant premium, but one that is far lower than Munich’s, where prices are more than double the national values for new builds.
A resale market restarting, new construction at a standstill
Mid-2025 figures show a gradual recovery in transaction volumes for existing properties. Approximately 6,100 sales of existing apartments were notarized in the period, with an average price around €5,140/m², up 3.2% year-on-year. A typical apartment offers about 70 m² and sells for around €373,000.
Conversely, the new-build segment remains almost paralyzed: barely 750 preliminary contracts for new apartments in the first half of 2025, compared to over 3,600 in 2021 and over 7,400 in 2016. Yet, new-build prices continue to rise, averaging around €8,390/m², an increase of over 5% year-on-year. The price differential with existing properties thus reaches 15 to 25%, which significantly increases the cost of buying into new projects.
Average construction cost per square meter for a multi-unit building, excluding land.
Extreme rental market tension
On the rental market, Berlin’s situation is very tense. Citywide, the average rent is around €16/m² in the third quarter of 2025, up 11% year-on-year. The GUTHMANN index for existing buildings shows a median rent of €16.35/m², up +8.3% in one year, +37% over three years, and +45% over five years.
For new constructions, the median rent reaches about €22/m², albeit with a decline of 4.6% year-on-year, suggesting that affordability ceilings are being reached in this segment.
At the same time, 2022 census data reminds us of the scale of the catch-up: the average “net cold” rent across the entire Berlin housing stock was only €7.67/m² at that time, with values ranging from €7.04/m² in Marzahn‑Hellersdorf to €8.73/m² in Charlottenburg‑Wilmersdorf. In a few years, asking rents have therefore almost doubled, while existing rents still remain well below market levels.
This tension is reflected in a proliferation of fixed-term leases: about half of recent listings concern temporary rentals, which reduces residential security for tenants.
Strong disparities between Berlin neighborhoods
Within Berlin, price differences between districts are considerable, whether for purchase or rent. Detailed statistics allow a clear distinction between central and gentrified neighborhoods and more accessible peripheral areas.
For existing apartments, the median sales prices clearly illustrate these gaps:
| District (existing apartments) | Median Price (€/m²) | 12-Month Change |
|---|---|---|
| Tiergarten | 8,360 | +2.3% |
| Mitte | 8,130 | +0.5% |
| Prenzlauer Berg | 6,650 | +1.5% |
| Wilmersdorf | 6,420 | -1.5% |
| Schöneberg | 6,070 | +4.1% |
| Charlottenburg | 6,030 | -1.0% |
| Kreuzberg | 6,030 | -3.5% |
| Friedrichshain | 6,040 | -0.5% |
| Pankow | 5,000 | +10.2% |
| Weißensee | 5,070 | +12.6% |
| Steglitz | 5,170 | +3.7% |
| Zehlendorf | 5,360 | +0.6% |
| Moabit | 5,460 | +2.8% |
| Neukölln | 4,850 | +2.2% |
| Wedding | 4,650 | +1.0% |
| Lichtenberg | 4,560 | -3.7% |
| Treptow | 4,420 | +0.6% |
| Tempelhof | 4,330 | +0.8% |
| Reinickendorf | 4,160 | +0.9% |
| Köpenick | 4,530 | -5.3% |
| Spandau | 3,700 | +0.5% |
| Marzahn‑Hellersdorf | 3,840 | 0.0% |
Several profiles are immediately apparent:
– The very central and prestigious areas (Mitte, Tiergarten, Charlottenburg, Wilmersdorf, Prenzlauer Berg) far exceed €6,000/m², with peaks above €8,000/m²;
– Neighborhoods with strong growth (Pankow, Weißensee) still have prices around €5,000/m² but with double-digit annual increases;
– The peripheral districts in the east and west (Marzahn‑Hellersdorf, Spandau, Reinickendorf, Lichtenberg) remain significantly more affordable, below €4,500/m².
Rents follow a similar hierarchy, although recent trends differ by neighborhood. Let’s take a few significant examples, again for existing apartments:
| District (existing apartments) | Median Rent (€/m²) | 12-Month Change |
|---|---|---|
| Mitte | 23.00 | +1.3% |
| Tiergarten | 20.60 | -5.0% |
| Wilmersdorf | 20.00 | +4.5% |
| Charlottenburg | 20.35 | +2.9% |
| Prenzlauer Berg | 20.15 | +8.0% |
| Kreuzberg | 19.75 | -5.1% |
| Schöneberg | 17.65 | +10.9% |
| Moabit | 18.20 | +16.1% |
| Friedrichshain | 17.55 | +17.2% |
| Neukölln | 13.40 | +18.2% |
| Pankow | 15.25 | +11.0% |
| Marzahn‑Hellersdorf | 13.00 | +23.7% |
| Spandau | 12.10 | +4.7% |
| Tempelhof | 12.75 | +14.2% |
The most spectacular increases are paradoxically found in districts previously considered affordable (Marzahn‑Hellersdorf, Neukölln, Friedrichshain, Moabit), a sign that demand is gradually shifting towards sectors that were once overlooked.
For investors, these figures mean that yield potential is not limited to central neighborhoods. A well-located existing apartment in Neukölln, acquired for around €4,800 to €5,000/m² and rented for over €13/m², can offer a gross yield comparable to, or even higher than, some assets in the historic center, where rents appear to be plateauing.
Munich, Frankfurt, Hamburg: the expensive locomotives of German real estate
Compared to Berlin, some cities have significantly higher price levels, often without benefiting from as spectacular a rental differential. This is particularly true for Munich.
Munich: the very high-end capital
Munich dominates the ranking of prices per m², with about €8,580/m² for existing properties and over €11,500/m² for new ones in the third quarter of 2025. Central neighborhoods like Maxvorstadt or Altstadt‑Lehel even reach ranges of €9,700 to €13,100/m², or more for premium properties. In some sectors, apartments commonly trade between €900,000 and €3 million, and the “luxury” bracket extends from €2.5 to over €10 million.
The median rental yield in Paris is often modest, around 2.5 to 3%.
Frankfurt: financial city, high prices and scarce supply
Frankfurt ranks just behind Munich in terms of price: about €6,079/m² for existing apartments and €8,170/m² for new ones. Central districts like Westend or Sachsenhausen regularly exceed €6,900 to €7,000/m², with a history of increases of nearly 80% over ten years in some segments.
The rental vacancy rate, almost nil, fuels constant tension in the market.
Hamburg: an expensive metropolis, but slightly more accessible
Hamburg shows values close to Berlin for existing properties (about €5,743/m²) and even higher for new ones (€8,859/m², up 7% year-on-year). In neighborhoods like Eppendorf or HafenCity, prices frequently fluctuate between €7,000 and €10,000/m² for apartments, with houses reaching up to €10,000/m² in the most sought-after sectors.
Rents there reach nearly €18/m² median, with a spectacular increase of over 18% between 2024 and 2025. Despite this, gross yields remain modest (around 3% on average), especially in the most sought-after districts, where investment security is paramount.
Cologne, Düsseldorf, Stuttgart: the mid-range of major metropolises
These three cities offer an interesting compromise between acquisition price, rents, and yield.
Comparison of prices, rents, and yields in three major German cities in 2026.
Existing price: ~€4,961/m² | New price: ~€7,116/m². Median rents > €16/m² (+8.5% year-on-year). Typical yields between 3 and 4%.
Existing price: ~€4,833/m² | New price: ~€7,518/m². Average 2026 price: €4,450-€4,750/m². Median rents ~€15/m² (+8% year-on-year). Decent yields, especially in catch-up sectors.
Existing price: ~€4,565/m² | New price: >€8,200/m². Average 2026 price: Apartment ~€4,400/m², House ~€5,000/m². Very tight market (vacancy ~0.5%), rents >€15/m². Highest average gross yield: ~4.7%.
For an investor, these three markets represent credible alternatives to Berlin and Hamburg, with slightly lower prices and comparable or slightly higher yields, or even significantly better in some sectors of Stuttgart.
Leipzig, Dresden, Nuremberg: major “secondary” cities in full catch-up mode
Beyond the most well-known metropolises, several major cities in eastern and southern Germany offer an attractive mix of moderate prices, decent yields, and appreciation potential.
Leipzig: contained prices, solid yields
Leipzig stands out as one of the most dynamic and accessible markets. Average apartment prices there are around €3,000/m², with significant gaps depending on location: some central neighborhoods exceed €3,500/m², while peripheral areas remain below €2,500/m².
Rents, although still affordable (about €11/m² median), are experiencing strong growth (+11.4% year-on-year). Gross rental yield is attractive, exceeding 4% on average and reaching 4.4 to 4.8% depending on the area. This dynamic is supported by strong demand, fueled by Leipzig’s image as a university and creative city, continuous population growth, and major urban regeneration projects in neighborhoods like Plagwitz, Südvorstadt, or Gohlis.
Dresden: stability and gradual rise
Dresden shows lower prices than Leipzig for apartments (around €2,900 to €3,400/m² depending on size and neighborhood), with a market considered robust and less volatile. Projections for 2026 suggest more stability, with slight increases in highly sought-after neighborhoods like Loschwitz, Weißer Hirsch, or Blasewitz, where single-family homes can reach nearly €6,000/m².
For investors, the city of Dresden offers decent rental yields, although slightly lower than Leipzig’s. Its real estate market has a profile more oriented toward security and long-term stability rather than strong short-term appreciation.
Nuremberg: a regional hub consolidating
Bavaria’s second city, Nuremberg is on an intermediate price trajectory, with apartments around €4,480/m² in 2026 and houses at about €4,255/m². Average rents are around €11/m², translating to yields on the order of 3 to 3.3%.
The city benefits from a solid economic fabric (industrial and service groups, a metropolitan hub with Fürth, Erlangen, Schwabach) and an active investment market. Recent institutional transactions testify to strong interest in residential property, even if values remain, on average, below those in metropolises like Munich or Frankfurt.
Dortmund, Essen, Bremen: the most affordable markets among major cities
Dortmund and Essen, in the heart of the Ruhr, offer the lowest prices per square meter among the major cities studied: around €2,540 to €2,560/m² for existing apartments. Bremen is at a slightly higher level, with about €2,800/m² for existing and €4,200/m² for new.
Property prices in the Ruhr basin, like in Essen, can offer attractive gross yields but indicate a less dynamic economic environment and less sustained demand than in major German metropolises. Despite this context, significant price increases are observed, for example an 8.1% increase in existing apartments in Essen between 2024 and 2025, demonstrating a gradual catch-up from initially low levels.
Structural factors explaining price gaps between cities
Several variables explain the price differences observed between major German cities:
Several key elements determine prices and market dynamics: the supply and demand tension in growing major cities; the local economic structure attracting high-income profiles; quality of life and urban attractiveness supporting demand; variable regulation and taxation depending on the federal state (Land); and finally, construction costs increased by energy standards, creating a premium for new builds.
Finally, mortgage interest rates play an arbiter role. After the era of rates near 1% in the 2015‑2021 years, new loans are negotiated around 3.7% in 2025. This normalization limits borrowing capacity and already contributed to the price correction in 2022‑2023, before the current recovery.
Buying in Germany: beyond the price per m², the importance of additional costs
Regardless of the chosen city, a buyer must account for costs that add to the purchase price. In Germany, the total cost of an acquisition commonly exceeds the net property price by 10 to 18%, a proportion that increases further in case of major renovation.
The main items are:
The purchase of a property in Germany incurs several significant costs beyond the purchase price. Notably, one must budget for: the real estate transfer tax (Grunderwerbsteuer), with a rate varying from 3.5% to 6.5% depending on the Land (e.g., 6.5% in North Rhine-Westphalia, 6% in Berlin, 3.5% in Bavaria); notary and land registry fees, representing about 1.5 to 2% of the price; real estate agent fees, often shared between seller and buyer, potentially reaching up to 3.57% for each party according to local practices; and finally, renovation costs. The latter can range from a few tens of thousands of euros for a refresh to over €150,000 for a complete modernization, including mandatory work on energy performance (insulation, heating system, etc.).
In a concrete example, a €200,000 apartment can generate about €14,000 to €15,000 in transfer and notary fees, to which possibly €25,000 for renovation is added. The total bill then approaches €210,000, over 5% above the purchase price alone, even with relatively moderate renovations.
How to position yourself depending on the targeted city?
The comparison of major German cities reveals several market profiles:
Panorama of the main categories of German cities according to their real estate dynamics, price level, and risk/return profile.
Very high prices and rents (e.g., Munich, Berlin). Modest yields. Wealth preservation orientation and low long-term volatility.
High prices but lower than prime markets (e.g., Cologne, Stuttgart). Rents rising strongly and yields often better, especially in transforming neighborhoods.
Contained prices and solid yields (e.g., Leipzig, Dresden). Potential for medium-term appreciation, with slightly higher risk in case of economic downturn.
Low entry ticket and sometimes interesting yields (e.g., Dortmund, Essen). Uncertain growth prospects, dependent on regional economic redevelopment.
In all cases, the trade-off between expensive but very liquid city (Munich, Berlin, Hamburg), mid-sized city with good yield (Cologne, Düsseldorf, Stuttgart), and catch-up market (Leipzig, Dresden, Nuremberg) will depend on the investment horizon, risk tolerance, and objective (capital appreciation, yield, personal use).
What is certain is that the “German average” hides considerable gaps between local markets. A detailed analysis by city, neighborhood, property type (existing vs. new), and rental profile (vacant vs. occupied unit) has become essential to navigate the complex landscape of residential real estate in Germany.
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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.
