Housing construction in Germany’s major cities

Rising interest rates, expensive building materials and the scarcity of building land mean that the traditional goal of owning a home is beyond the reach of many families. The obvious alternative is living in rental accommodation, often in an urban area. In addition, persistently high migration figures – more than one million people from Ukraine in 2022 alone – are leading to significantly more demand for rental housing in Germany. Large and medium-sized cities are in particularly high demand. The eight major cities with more than 600,000 inhabitants – Berlin, Hamburg, Munich, Cologne, Frankfurt am Main, Düsseldorf, Leipzig and Stuttgart – are the focus of attention not just of those looking for housing, but traditionally also of investors and developers. However, supply and demand have not been well matched for a long time now. The situation on the rental housing market is exacerbated by the fact that many projects are being postponed or cancelled due to increased construction costs and interest rates, as well as the lack of land and building permits. According to the leading body of the German housing and real estate industry, GdW, the construction of every third planned new dwelling is being put on hold this year and next. The consequent scarcities are not only resulting in waiting lists, but, above all, are driving rental prices up.