Affordability crisis deepens in German housing

Both tenants and property sector decision-makers in Germany agree on major challenges facing the German rental market, according to the Aareal Trend barometer for 2025.

Germany

A survey of over 5,000 tenants highlights that housing affordability is a major social concern, with 91% believing average earners in cities can no longer afford rent, and 87% seeing high rents as a threat to social stability. A significant 80-82% of tenants also feel that property ownership is out of reach and that housing should not be purely profit-driven.
Tenants are also highly sensitive to energy-efficient renovations, with 70% fearing these will worsen rental costs. While 53% value sustainable buildings due to rising operating costs, many are already actively trying to save energy. Digital services are lagging, with only a quarter of tenants satisfied, despite strong demand for fast internet and digital communication. Security is another concern, with only 31% feeling very secure at home.
Tenants overwhelmingly demand that housing be reliable, affordable, and fair. They expect more social housing from the sector (69%) and from politicians, a reduction in bureaucracy (72%) and targeted housing subsidies (65%). A strong majority (74%) supports rent control.
Property sector decision-makers largely echo these concerns, with 80% finding urban rents unaffordable for average earners and 94% expecting energy retrofits to strain the market further. They urge politicians to foster affordable housing by reducing ancillary construction costs (98%), cutting red tape (94%), and providing targeted support (82%). However, they diverge on rent control, with three-quarters viewing it as an obstacle to new construction.
The industry also faces a structural problem with skilled trade shortages (88%), which negatively impact new construction and maintenance. Decision-makers see digitisation of routine tasks, such as booking, payments, and tenant services, as a key solution.
In conclusion, the report emphasises that affordability, sustainability, and digitisation will define the future of housing. Both tenants and the sector call for bold action from politicians to dismantle bureaucratic barriers, make pragmatic building decisions, and ensure a socially acceptable energy transition. Increased investment in digitisation and addressing skilled labour shortages are crucial to boost new construction rates.
Lars Ernst, managing director Banking & Digital Solutions, Aareal Bank, said: "Building new apartments needs creative courage. We have to reduce red tape, make better use of existing leeway, and boost investment through clear, pragmatic rules. The new "Bau-Turbo" law of October 2025, speeding up planning and approval processes, promises some relief, but alone it is not enough to create new, affordable housing. Building must become cheaper and more profitable to attract private investment. That includes particularly simplifying construction standards and the significant acceleration of building approvals."