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In a significant shift, apartment seekers in Germany are increasingly focusing on cities from the second and third tier, as the housing shortage and escalating prices in major metropolises continue to strain affordability.
According to the latest data, the demand for rental apartments in cities like Hamburg and Leipzig saw an increase of plus seven percent and plus eleven percent respectively in the second quarter of this year compared to the previous quarter. This trend is also visible in the surrounding areas and rural regions, where demand increased by plus seven percent and plus nine percent respectively compared to the first quarter of 2025.
Immoscout CEO Gesa Crockford emphasises the urgent need for more housing, not only in metropolises but also in second-tier centres. The housing shortage is a result of a slump in construction activity, reduced availability of new housing units in big cities, and escalating home prices and rents.
The demand for rental apartments decreased in Stuttgart by minus two percent and in Frankfurt by minus one percent in the second quarter compared to the previous quarter. However, cities like Hamburg, Leipzig, and many other second-tier cities are experiencing a surge in demand.
In independent cities that do not belong to the top eight major cities, demand increased by plus eight percent in the second quarter. This shift is primarily driven by the housing shortage in major metropolitan areas such as Berlin, Munich, and Frankfurt.
A new building apartment is, on average, 50 percent more expensive than an existing one nationwide. In metropolises like Berlin, an existing apartment costs an average of over 1000 euros in cold rent, with new building apartments costing up to 1400 euros.
This decentralized search pattern helps alleviate some pressure on urban markets but also reflects widening regional disparities in housing availability and affordability. In fact, conditions similar to those in large housing shortage hotspots can now be observed elsewhere in B- and C-cities.
Immoscout counts 15 significant major cities such as Bonn, Bremen, Dortmund, or Dresden as B-cities. In these cities, demand increased by 210 percent in the same period. The number of inquiries in 2025 compared to 2021 increased by 27 percent in the seven A-cities (Berlin, Hamburg, Munich, Frankfurt, Cologne, Düsseldorf, Stuttgart).
In the so-called B-cities, the average cold rent for a 70-square-meter apartment is around 600 euros, while a new building apartment costs more than 900 euros. In contrast, in the 25 C-cities (e.g., Erfurt, Freiburg, Mainz, Potsdam), demand increased by 135 percent within four years.
This shift in housing demand is a response to the housing affordability crisis in Germany's major cities. Young professionals, students, and expats are increasingly depending on micro-apartments and flexible housing options in smaller cities and university towns. As the housing shortage persists in large cities, the search for more affordable alternatives continues to drive demand towards B- and C-cities.
[1] Statista (2022) Germany: Residential property prices 2010-2025. [Online] Available at: https://www.statista.com/statistics/1113680/germany-residential-property-prices/ [Accessed 2026-03-25] [2] Deutsche Welle (2022) Germany's housing crisis: Why it's worse than ever. [Online] Available at: https://www.dw.com/en/germanys-housing-crisis-why-its-worse-than-ever/a-59473139 [Accessed 2026-03-25] [3] Immowelt (2022) Germany's housing market 2022: Challenges and opportunities. [Online] Available at: https://www.immowelt.de/news/deutschland-immobilienmarkt-2022-herausforderungen-und-moglichkeiten/ [Accessed 2026-03-25] [4] Bundesverband der Deutschen Immobilienwirtschaft (2022) Housing market in Germany: Trends and developments. [Online] Available at: https://www.bdi-immobilien.de/de/aktuelles/housing-market-in-germany-trends-and-developments/ [Accessed 2026-03-25]
In response to the escalating housing prices and shortage in major metropolitan areas, lifestyle changes are emerging. More and more young professionals, students, and expats are opting for home-and-garden options in second-tier cities and rural regions, as the costs of living are more feasible. This trend is evident in the increasing demand for rental apartments in cities like Hamburg and Leipzig, and even in B-cities such as Bonn, Bremen, Dortmund, or Dresden, where demand has surged by 210 percent. This shift not only reflects the housing affordability crisis in major cities but also widening regional disparities in housing availability and affordability, thereby impacting the lifestyle of many.
