Asking rents in all city categories are continuing their upward trend with high momentum, as an analysis by BNP Paribas Real Estate for the first half of 2026 shows. This increase extends across all market segments, driven by a persistent shortage of supply and unceasing high demand, which maintain pressure on rental prices.
The German rental housing market appears remarkably robust. Despite already high levels, asking rents in all surveyed city categories again rose noticeably within six months. In A-cities, as well as large and medium-sized cities, asking rents for existing properties recorded an increase of 3 % each since the beginning of the year. University towns showed the highest momentum with a plus of 4 %. A-cities continue to lead the rental price ranking with an average asking rent of 16.25 €/m², followed by university towns with 12.75 €/m².
A shift in rental price dynamics from metropolitan areas to other locations is discernible. University and medium-sized cities in particular are benefiting from high housing demand, while supply remains scarce in many places due to declining construction completions and persistently high construction costs. This trend is particularly pronounced in the new-build segment.
Christoph Meszelinsky, Managing Director and Head of Residential Investment at BNP Paribas Real Estate GmbH, highlighted that the strongest rental price dynamics are currently often observed outside the classic top locations. He notes that numerous university and medium-sized cities today show similarly stable fundamental data as metropolitan areas, but sometimes still benefit from lower rental and purchase price levels. This offers investors increasingly attractive opportunities beyond the established A-cities.
The median asking rent for new-build flats in Germany's seven largest cities currently stands at 21.35 €/m², an increase of 2 % compared to the beginning of the year. Munich remains the most expensive new-build location at 25.90 €/m². Hamburg follows in second place with 23.00 €/m². Stuttgart moves up to third place with 20.80 €/m², overtaking Berlin, Frankfurt, and Düsseldorf. Outside the top locations, Freiburg im Breisgau (20.00 €/m²), Heidelberg (19.90 €/m²), and Potsdam (19.35 €/m²) are among the most expensive new-build rental housing markets.
The interest rate turnaround has had a lasting impact on the German residential investment market. The analysis shows that market adjustment since the 2021 peak varied depending on the city category. While purchase price factors in A and B cities developed comparatively similarly, the correction in C cities was more pronounced. At the same time, the fundamental data of many housing markets strengthened due to rising rents, falling vacancies, and a persistent excess of demand.
Christoph Meszelinsky emphasises that the market adjustment since 2021 has been more differentiated than widely expected. C-cities are now valued with higher risk and liquidity premiums, while many B-cities show proximity to A-locations. The interest rate turnaround has made the differences between market segments more visible again and significantly increased the importance of market quality, liquidity, and fungibility.
The structural shortage of supply in the German rental housing markets is likely to persist in the coming years. A noticeable expansion of housing supply is not to be expected in the short term due to long development and construction periods. At the same time, demand for housing remains high, driven by population growth and urbanisation trends in A-cities, as well as continuously strong demand dynamics in university, large, and medium-sized cities. These framework conditions suggest continued high attractiveness of the German rental housing market, which offers stability and predictability for residential properties amidst increased geo- and macroeconomic uncertainties.
