Trend reversed: rents rise faster than purchase prices

For many years, property prices rose faster than rents. According to a recent analysis, this trend has been reversed over the last two years – which makes buying a house or apartment more attractive.

Rent or buy? For many years, price trends were an argument in favor of the former for those looking for an apartment. Prices for condominiums in Germany rose by a low of 76.5 percent between 2016 and 2022, as a recent analysis by the service provider ImmoScout 24 shows. Rents for existing apartments rose significantly less dynamically in the same period, at 26.8 percent.

The reasons for this were comparatively low interest rates and high purchasing demand, which met with limited supply.

Rental market increasingly tense

However, this trend has been reversed for the last two years. Rental prices have recently risen significantly more than purchase prices. This is particularly due to the fact that prices for existing apartments have been falling since 2022, according to ImmoScout 24. The price index for condominiums fell by 9.4 percent between 2022 and 2024, while rents rose by 11.7 percent.

This means that the difference in price development has decreased from the peak of 39.2 percent in 2022 to 12.9 percent, “and the gap is beginning to close,” according to the real estate portal. This means that the financial burden for tenants is increasing in view of the strong pressure on the rental market.

Buying becomes more attractive

Especially in Germany’s five largest cities – Berlin, Hamburg, Munich, Cologne and Frankfurt am Main – the development of rental and purchase prices is converging. An earlier ImmoScout analysis from March showed that rental apartments in the 40 largest cities in Germany received 21 times more inquiries than condominiums.

“The sharp rise in rents in particular is making property purchases as an investment or home more and more attractive,” explains Gesa Crockford, Managing Director of ImmoScout24. In the last two years, buying has become increasingly worthwhile, particularly in major cities. “There, the difference between purchase and rental prices has leveled off from 30 percent and more to a low single-digit percentage range.”