German Rents Surge 3.7% as Housing Construction Slows

German rents rose 3.7% annually in the third quarter of 2026, with asking prices for existing apartments rising faster than those for newly built homes. The Kiel Institute for the World Economy reported that rents increased by 1.2 percent in the third quarter compared with the previous quarter, marking the strongest quarterly rise since early 2025, with annual growth at 3.7 percent.

The rental surge comes as Germany's housing construction crisis deepens. Last year, only about 206,600 apartments were completed nationwide – 18 percent less than 2024 and the lowest figure since 2012. The German construction industry has warned that residential building activity could decline further as rising costs weaken the profitability of new projects, with the construction federation president citing higher expenses, particularly for energy, as making construction increasingly difficult to justify financially.

The Supply-Demand Mismatch

• Existing apartments seeing steeper price rises than new build inventory
• The Pestel Institute projects a deficit of about 1.35 million apartments by the end of 2025
• Energy and labour costs squeezing developer margins
• Government subsidies for affordable housing facing constitutional and budgetary limits

For expats and anyone renting in Germany, this trend signals continued upward pressure on rents across major cities and secondary markets. If you're renewing a lease or searching for housing, expect negotiations to favour landlords. Long-term residents should investigate rent-control regulations (Mietpreisbremse) where they apply, and newly arrived expats should budget 5–10% higher accommodation costs than pre-2025 benchmarks.

Sources

• GermanPolicy.com — Housing crisis: tensions between rising rents and construction policy
• RTE — Why the crisis in residential construction continues