Germany

Germany remains a nation of renters, with about 55% of households renting their homes and only around 45% owning their residence. In 2025, the median price to rent an apartment is approximately 12 to 13 euros per square meter nationally, while buying an apartment averages around 4,100 euros per square meter across the country, with higher prices in major cities and for new builds. Rents have increased strongly over the past year, though recent quarters show some moderation in price growth. Publicly owned and social housing play a distinct, but relatively small, role in the market: less than 5% of all dwellings are public or municipal housing, and the share of officially designated social housing—meaning homes with rent and occupancy restrictions due to public subsidies—has declined steadily in recent decades. In Germany, public housing refers to homes owned or managed by municipalities or non-profit entities, which may be rented at non-market rates or with strong tenant protections, while social housing specifically denotes dwellings subsidized and regulated for a set period. Once subsidies expire, these homes return to the general market. The two types of housing frequently overlap but are not fully synonymous, especially in large cities, where municipal companies may own both regulated social units and regular market rentals.

Germany faces a pronounced housing crisis marked by a persistent shortage and rising unaffordability, especially in its major cities and fast-growing metropolitan regions. Housing completions dropped sharply in 2024, with only about 252,000 units finished—a decrease of more than 14% from the previous year. Building permits hit their lowest level since 2010 and remain far below the roughly 320,000 new homes experts say are needed each year to meet demand. While population growth has slowed at the national level, large cities and “A-cities” like Berlin, Munich, and Frankfurt continue to draw new residents, deepening local shortages.

Rents rose nationwide by 4.7% in 2024—much faster in top cities, with asking rents for new apartments surpassing 22 euros per square meter in Munich. In cities like Stuttgart and Cologne, the gap between demand and new supply is especially severe, with as many as 40 dwellings missing per 10,000 residents. The sharply escalating costs of land, financing, and construction have further choked new building activity.

The crisis affects renters most acutely, particularly young people, low-income households, single parents, immigrants, and other vulnerable groups. Urban professionals and families are increasingly priced out of central locations. The rental market has become fiercely competitive, with high demand leading to very rapid tenant turnover and little availability.

Germany’s current national government has set ambitious targets to improve affordable and sustainable housing, aiming in their coalition agreement for a significant increase in annual housing construction and a reduction in regulatory barriers. The draft law adopted in June 2025, often called the “construction turbo,” is central: it seeks to simplify and speed up planning and approval procedures, allowing generous exemptions from existing rules where new housing is prioritized and supporting faster, less bureaucratic processes, especially in urban areas.

Key tools include the introduction of an easier, more cost-effective “Building Type E” standard to reduce non-essential construction requirements, and expanded promotion of serial and modular building methods. The government aims to keep new housing rents below 15 euros per square meter in tight markets and has bundled federal subsidies for both new climate-friendly construction and modernization into streamlined, easier-to-navigate programs. Improved tax incentives and temporary reinstatement of lower energy standards (EH-55) are also being deployed to boost sustainable development, with expanded financial guarantees and equity-replacement measures for developers.

On tenancy, protections are set to grow: the extended rent brake now runs until the end of 2029, with stricter controls on furnished and short-term lettings, proposed fine increases for rent abuses, and tax reliefs for landlords who offer affordable rents. An expert commission will develop broader tenancy law reforms by 2026. The government aims to sharply accelerate digitalization in housing administration, further cutting delays and red tape.

Housing cooperatives play a significant role in Germany’s rental housing market, with around 2,000 cooperatives managing more than 2 million dwellings nationwide. This represents roughly 5% of the total housing stock and over 9% of all rental units, marking them as an essential provider of affordable, socially just housing. The sector is experiencing renewed growth, fueled by rising market rents and shortages in urban areas. Cooperative tenants typically benefit from lower-than-average rents, stable housing, community engagement, and empowered participation in housing management. Leading associations like GdW represent these cooperatives and are politically active in advocating for their interests.

Recent years have seen cooperatives increasingly invest in sustainable construction, multi-generational and barrier-free housing, and innovative living models. However, overall new construction by cooperatives has slowed due to higher building costs and financing challenges. Policy responses include the national government’s support for cooperatives via streamlined subsidies for climate-friendly construction and reduced regulatory barriers driven by the recent “construction turbo” initiative. 2025 was officially declared the “Year of Cooperatives,” highlighting government recognition of their importance. Despite these efforts, cooperative housing—while more resilient than much of the broader market—faces challenges from investment backlogs and stricter demands. National programs now further emphasize affordable growth, modernization, and tenant protection, aiming to stabilize and expand the sector’s share.