Published on and written by Cyril Jarnias
Long overlooked, the German market for second homes is stepping out of the shadows. It benefits from the structural solidity of German real estate, the rise of remote work, the upscaling of domestic tourism, and the growing need to place savings in tangible assets. However, it also faces a strict regulatory environment, a chronic housing shortage, and a public opinion increasingly sensitive to the adverse effects of vacation homes on local markets.
A second home is a multi-use investment: it serves as a weekend house, can become a future retirement home, generates income through seasonal rental, and acts as a tool for wealth transfer.
A secondary market built on a very solid real estate foundation
To understand the German second-home market, one must first look at the overall housing context. German residential real estate is emerging from a correction phase: after more than ten years of nearly uninterrupted growth, prices fell by around 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, a 4.4% year-on-year increase.
Forecasts for the coming years outline a scenario of moderate growth, without speculative frenzy: 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 by 2027, prices are expected to remain slightly below their nominal 2022 peak and significantly lower in real terms, once inflation is deducted.
This context is decisive for second homes. It means that buyers of vacation houses 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 safe-haven status of German brick and mortar, particularly for international investors.
Why Germany attracts second-home buyers
German real estate combines several characteristics that make it a natural ground for second homes, whether for German or foreign buyers.
The country is considered one of Europe’s most stable and transparent markets. The legal framework is solid, property rights are well-protected, and, notably, there are no restrictions in principle for foreign buyers: whether EU citizens or third-country nationals, non-residents can purchase apartments, houses, buildings, or land under the same conditions as a German. However, buying real estate does not confer the right to a residence permit or facilitate access to citizenship: property and immigration remain two separate worlds.
Homeownership rate in Germany, well below the European average of over 65%.
Incentive tax elements for a long-term strategy are added: capital gains are exempt after ten years of ownership (or after just three years if the property served as a primary residence), which favors heritage purchases of second homes planned over a horizon of several decades.
Demand fueled by multiple uses
In this context, purchasing a second home responds to several logics that often combine:
In Germany, a second home can serve as a refuge for weekends and vacations, in sought-after regions like the Bavarian Alps, the North and Baltic Sea coasts, or around the large southern lakes. 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. It also constitutes a wealth optimization tool, for example, by buying a larger property to live in and renting out the old one, or acquiring a rental property to pass on to children. Finally, it can be an investment vehicle, particularly when partially rented out seasonally, thus combining personal use and return.
The line between a “use” second home and a pure investment is thin: to be considered a second home in the banking or tax sense in many schemes, the property must generally be occupied by the owner for at least two weeks per year, not be rented 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 deep-seated trend: travelers’ growing preference for unique accommodations integrated into their environment over standardized hotels.
In 2023, vacation rentals in Germany generated approximately $4.3 billion in revenue. Projections anticipate $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 or resorts. The average price per night is about $205, and the annual availability rate is 60%, indicating 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), the 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 rental coexists with the classic rental market.
To gauge the extent of the “vacation” premium, one only needs to look at prices per square meter in these hotspots.
Statistical 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 |
| Lake Tegernsee | 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 on average (Q3 2025) |
A dual contrast appears. On one hand, prices in the most upscale beach and lake resorts (Sylt, Tegernsee, Starnberger See) rival those in central neighborhoods of Munich or Hamburg, with peaks well above €20,000/m². On the other hand, some so-called “B-cities” 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 rental: a driver of profitability… and tensions
In highly touristic areas, a well-located vacation home can often yield more than a long-term 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, net profitability, after deducting management, maintenance, and financing costs, can significantly exceed that of a classic lease.
Number of new housing units delivered nationally 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 major metropolises and their suburbs, maintains a deep imbalance between supply and demand. In this context, every apartment diverted from the residential market for tourist rental 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 reshaping the market. In 2019, barely 12.9% of employed people in Germany worked at least partially from home; they were 23.5% in 2023, nearly double. Among highly skilled professions and managers, nearly one in two workers now practices working from home at least part of the week.
Even though many executives favor a return to the office, the dominant trend is the adoption of hybrid models. Major companies like SAP or Volkswagen now require a few days of physical presence per week while allowing several days of remote work. Surveys indicate that employees place great value on this flexibility, equating it, in terms of satisfaction, to a salary increase.
This evolution has very concrete effects on the second-home market:
Remote work alters residential behavior by expanding acceptable geographic areas around major employment hubs, allowing workers to settle further away in houses with offices and gardens. It values properties offering quality of life, reliable internet connection, quiet, and sufficient space for work. Finally, it desynchronizes the use of second homes, with extended stays for remote work, especially on Mondays or Fridays.
The comparison 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 mild climates and lower living costs. 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 for a second home:
| Cost Item | Typical Range |
|---|---|
| Real Estate Transfer Tax (Grunderwerbsteuer) | 3.5% to 6.5% of price depending on the state (Land) |
| Notary + Land Registry Entry (Grundbuch) | 1.5% to 2.0% |
| Real Estate Agent Commission | 3% to 7% (often shared) |
| Other (appraisal, translations, etc.) | ~0.5% to 1% |
| Total ancillary costs | Approximately 8% to 12% of purchase price |
In Berlin, the transfer tax reaches 6%, compared to 3.5% in Bavaria, for example. On a vacation house costing €800,000, one could thus spend between €40,000 and €75,000 in ancillary costs, which requires aiming for a long holding horizon to amortize these costs.
Most banks also require a substantial down payment. For a first purchase, it is common to need to advance 20% to 30% of the price, plus the 8% to 12% of non-financeable costs. 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 generally must provide a down payment of 30% to 40%, or even more.
Average rate observed for 10-year fixed-rate mortgages in August 2025.
Second-Home Tax (Zweitwohnungsteuer)
A German particularity not to 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 on a partial or seasonal basis, as long as it is used for private purposes.
The calculation method varies by municipality but most often is based on the theoretical annual rent (or a reference rent) to which a rate typically between 7% and 20% is applied. Some approximate figures:
| City / Region | Indicated Zweitwohnungsteuer Rate |
|---|---|
| Munich | 18% |
| Berlin | 15% to 20% (rate tripled in 2019) |
| Hamburg | 8% |
| Sylt | 6% |
| Jena | 0% (exemption) |
This tax is in addition to ordinary taxation (income tax, property tax) and must be the subject of a specific declaration each year. Exemptions exist, notably for married people who maintain their family primary residence and occupy the second residence for professional reasons (dual household), or for low-income students in certain regions. Conversely, a property 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 may also be classified as tax fraud.
Strict regulation of short-term rentals
In large cities and tourist hotspots, the regulation of vacation rentals has become very tight. Municipalities generally impose:
– a registration obligation 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 housing per neighborhood;
– payment of tourist taxes and, in some cases, anti-vacancy rules to prevent dwellings from remaining empty.
Berlin, for example, strongly limits the conversion of rental apartments into furnished tourist accommodations in high-pressure 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 monetization strategy of the property: a nearly exclusively personal use will be little affected, but a model heavily oriented towards 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 portion of international interest. For an urban second home that combines enjoyment and rental perspective (classic or seasonal depending on local rules), these metropolises offer a liquidity/security pairing that is hard to match.
Price data for apartments in the third quarter of 2025 illustrate the extent of disparities between these cities:
| City | Existing Apartments (€/m²) | Annual Change | New Construction (€/m²) | Annual Change |
|---|---|---|---|---|
| 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, even for a rental second-home project. Market rents follow the same hierarchy: Munich shows 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. It can potentially be classified as a tax-deductible dual household if it is close to the workplace. It can also be a pleasure apartment, 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 mapping of opportunities is not limited to major metropolises. Numerous mid-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 by 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 mixed use: occupy it part of the year and rent it out the rest of the time to students or young professionals.
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, capable of appealing to both family use and a demanding rental clientele.
Financing your second home: equity, cash-out, and dedicated loans
For a household already owning its primary residence, the key to a second purchase often lies in valuing existing assets. The German banking system is structured around a prudent 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:
Two strategies allow financing a second home using the net equity of one’s primary property. Cash-out refinancing involves renegotiating an existing loan to increase the borrowed capital and free up liquidity. For example, on a house worth €600,000 with €250,000 remaining debt, and with a loan-to-value ratio of 80%, the owner can obtain up to €230,000 in additional cash while refinancing their mortgage. Alternatively, pledging a fully paid-off property, like a €300,000 house with no debt, can serve as collateral. Up to 80% of its value, i.e., €240,000, this can secure better terms for the new loan (lower interest rates, reduced monthly payments) intended for acquiring the second home.
These arrangements 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 in Germany. For a non-resident, financing rarely exceeds 60% of the property’s value, the remainder must come from own 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.
Professional dual household: a favorable special case
When a taxpayer maintains a dwelling near their workplace which 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 residence remains the center of life (family, friends, financial contribution to expenses) – they can deduct from their taxable income:
Discover the various financial aids available to facilitate your move following a professional transfer.
Coverage of rent and charges for the residence near the workplace, up to €1,000 per month.
Coverage of a weekly round trip to the primary residence, reimbursed at a flat rate of €0.30 per kilometer.
Coverage of moving expenses and certain installation costs related to your new residence.
Payment of a flat-rate allowance for meals during the first three months following your relocation.
In this case, the second-home tax can itself be accounted for as deductible professional expenses. For a buyer considering the second home as housing 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 out – seasonally or long-term – the income is taxed at the progressive income tax rate (approximately 14% to 45%, plus solidarity surcharge). In return, a wide range of expenses are deductible:
Main costs to anticipate for a rental investment include loan interest, management and agency fees, repair and maintenance work, building depreciation (generally 2% per year for existing buildings, sometimes more for certain recent constructions), and local taxes like property tax and 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.
Upon resale, capital gains are taxable if the holding period is less than ten years, unless the property was occupied as a primary residence for at least two years. Beyond ten years, the sale is exempt from any capital gains tax, which encourages holding onto one’s 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 dwelling for energy-efficient renovation in Germany, accompanied by partial subsidies.
In the vacation home segment, this sustainability requirement translates into the emergence of very specific niches: certified wood cabins, energy-positive houses, eco-lodges integrated into the landscape. Many offers of second homes with sustainability labels focus on ecological materials, near energy self-sufficiency, and strong integration into the local fabric (sourcing regional products, short supply chains, soft mobility).
In Germany, particularly in North Sea, Baltic Sea resorts, and on some Bavarian lakes, price surges due to second homes put pressure on the local population and generate resentment. To limit these negative effects, tools such as regulations against intentional vacancy, limits on tourist rental days, and a tax on second residences are implemented.
This evolution reinforces an already observed trend 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 new vacation home construction is somewhat weaker.
Towards 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 classic 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 percentage of rental income that the 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 increasing transaction costs demands a more analytical approach than before. Prospective buyers can no longer simply rely on nearly automatic price increases: they must integrate local specifics (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 major assets: 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 think long-term, navigate sometimes complex taxation, and respect local rules, numerous opportunities exist: weekend apartments in Leipzig, passive houses in the Black Forest, chalets by Bavarian lakes, or mixed-use (work/leisure) pieds-à-terre in Berlin.
The era of quick speculation is over, replaced by the patient construction of a vacation heritage 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.
