Germany’s homeownership rate fell to 43.5% in 2025. That is the lowest level in more than 20 years.
Nearly three-quarters of Germans aged 25 to 45 now rent instead of own.
Germany Ranks Second-Lowest in Europe for Homeownership
Germany now ranks second-lowest in the EU for homeownership. Only Switzerland ranks lower.
Rising Construction Costs Are Pricing Out German Buyers
The Pestel Institute for Housing Market Research tracked the trend. It points to a widening gap between construction costs and inflation.
Since 2000, construction costs have risen 160%. General consumer prices rose only 64% over the same period.
Higher interest rates have made the gap harder to close. Building or buying a home is now out of reach for many households.
The institute’s leadership blames high costs and high rates for the drop. It also says existing housing policy makes the problem worse.
Ending Baukindergeld Cost Germany More Than It Saved
The institute names one policy mistake. Germany ended the child-building subsidy (Baukindergeld) five years ago.
The institute says this saved little money. It argues the cut cost the state more in the long run.
Fewer first-time buyers entered the market as a result. Construction costs were climbing at the time.
What this means if you’re renting long-term in Germany?
If you rent long-term, you are not alone. Three in four Germans aged 25 to 45 rent too.
Renting in Germany [Rent Successfully in Germany] ->
Fewer people are buying homes, so demand for rentals stays high. Expect strong competition for rental units in the coming years.
NOTE: These figures come from a research study, not a new law. No new government program has been announced yet.
What is the Pestel Institute calling for?
The Pestel institute wants reforms to construction costs and buyer incentives. Its goal is to let 200,000 households become homeowners each year.
This is only a recommendation for now. No new grant or subsidy exists yet.
Steps to Take If You’re Considering Buying in Germany
Follow these steps if you’re weighing a home purchase in Germany right now:
- Budget for construction costs that have outpaced inflation. Factor this into any renovation or new-build plans.
- Check today’s financing conditions with a Baufinanzierungsberater. Interest rates are higher than in the 2010s.
- Look into KfW low-interest loan programs for buyers and energy-efficient building. These can offset some upfront costs.
- If buying isn’t realistic now, plan for a competitive rental market. More would-be buyers means more renters competing for the same flats.
Sources
- Newsworm — Homeownership in Germany Falls to Lowest Level in 20 Years
- Pestel-Institut — “Wohneigentum in Deutschland” (2025 study PDF)
- Pestel-Institut — Wohnungsmarkt (institute’s housing-market page)
- Eurostat — 68% of people living in EU households own their home
- Destatis — Wohnen in Deutschland (housing statistics hub)
