Buying or renting? The relationship is changing

Real estate analysis of the eight A-cities

In many German cities, the gap between income and housing costs is widening. While wages are rising moderately, rents in conurbations such as Berlin and Hamburg are continuously skyrocketing. For low-income households, this often means a rent burden of up to 30 percent of net income - a level that is considered critical. At the same time, property purchase prices in some regions have fallen or stagnated in the last two years, which raises the question: Is buying a home becoming more attractive again?

The VON POLL IMMOBILIEN experts have therefore analyzed how the ratio of average rental and property purchase ^prices1 to average ^income2 has developed in the eight A-cities - Berlin, Frankfurt am Main, Munich, Hamburg, Düsseldorf, Stuttgart, Cologne and Leipzig - from 2020 to 2024. For better ^{comparability3}, the index starts with a base value of 100 in the first quarter of 2020.

Daniel Ritter, Managing Partner at VON POLL IMMOBILIEN:

"Particularly in the big cities, we are observing that for many households, renting now represents a greater monthly burden than financing a comparable property," says Daniel Ritter, Managing Partner at VON POLL IMMOBILIEN. "Even though interest rates are currently higher than they were just a few years ago, the costs are being put into perspective by lower purchase prices and largely stable financing conditions. At the same time, the current market situation is giving buyers more room for negotiation and better entry opportunities. As a result, home ownership is once again becoming a realistic and better alternative to renting for many - particularly with a view to long-term relief in old age and the additional security of an inflation-protected asset."

Particularly striking is the contrasting trend in the ratio of rental and purchase prices to average income in all eight A-cities since 2020: Berlin, Frankfurt am Main, Munich, Hamburg, Düsseldorf, Stuttgart, Cologne and Leipzig. While the rent burden in relation to income has been lower than the purchase price burden in relation to income in almost all locations since the first quarter of 2020, the picture has reversed significantly in some cases. In all cities, the rent-to-income ratio at the end of 2024 is above the level of the purchase price burden in relation to average income, which represents a significant shift compared to the starting point in 2020.

Berlin has seen the highest increase in the rent-to-income ratio since 2020. The rent-to-income ratio rose from 100 percent in the first quarter of 2020 to 124.1 percent in the fourth quarter of 2024. The increase has been particularly dynamic since 2022. At the same time, the purchase price-to-income ratio fell from 113.1 percent - a peak in the fourth quarter of 2021 - to 95.8 percent at the end of 2024. This means that Berlin is becoming noticeably more expensive for tenants, while ownership has become slightly more affordable again in relation to income despite high entry costs.

Fig. 1: Development of average rental and property purchase prices in relation to average income in the A-cities of Berlin, Leipzig and Hamburg from 2020 to 2024 - indexed (chart: von Poll Immobilien GmbH)

Andreas Gräfenstein, branch manager at the VON POLL IMMOBILIEN partner store Berlin Treptow-Köpenick:

"Rents in Berlin have risen significantly over the last two years - both for new lettings and for existing properties. The greatest burden here results from the gap between less sharply rising incomes and continuously rising asking rents. Many tenants are feeling the effects of this development directly and are reporting a tense search for accommodation, particularly in sought-after districts. In contrast, the market for properties for sale has been stabilizing for several months. Families who were previously put off by high purchase prices are also becoming more active again. In principle, now is a good time for well-prepared buyers: the combination of lower prices, more stable interest rates, greater scope for negotiation and the possibility of hedging against inflation through tangible assets currently speaks in favor of buying a property. The prerequisite is solid financing - ideally with some equity and a longer planning horizon. Buying today provides long-term protection against rising rents and old age."

The second strongest increase in the rent-to-income index among the A-cities was in Leipzig, from 100 percent in the first quarter of 2020 to 111.7 percent in the fourth quarter of 2024. However, the ratio of property purchase prices to income increased only moderately: from 100 percent at the beginning of 2020 to 108.2 percent in the fourth quarter of 2024, after an interim high of 121.6 percent in the fourth quarter of 2021. Leipzig thus remains slightly above average in both areas in terms of affordability for tenants and buyers.

Hamburg tenants feel the third-highest burden on income within the current A-city analysis. The rent-to-income index stood at 108.3 percent at the end of 2024, up from 100 percent at the start of 2020. By contrast, purchase prices fell significantly from a high of 115.9 percent in the second quarter of 2022 to 93.8 percent at the end of 2024. This means that buying is more affordable again in Hamburg, while rents cost a significantly higher proportion of income than just a few years ago.

The metropolis of Hamburg is followed by Cologne and Düsseldorf in terms of the highest rent burden within the A-cities. The rent-to-income ratio rose to 107.3 percent in Cologne and 106.5 percent in Düsseldorf during the analysis period. In contrast, the purchase price-to-income ratio in Cologne fell from a high of 118.9% in the second quarter of 2022 to 104.9%. In Düsseldorf, too, the ratio of property purchase prices to income fell from a high of 122.2% in the first quarter of 2022 to 100.3% in the fourth quarter of 2024. The figures show that the ratio of property purchase prices to income has also visibly fallen in Cologne and Düsseldorf, while rents tend to follow an upward trend.

Fig. 2: Development of average rental and property purchase prices in relation to average income in the A cities of Cologne and Düsseldorf from 2020 to 2024 - indexed (chart: von Poll Immobilien GmbH)

In contrast to the other A-cities analyzed, Munich, Frankfurt am Main and Stuttgart are characterized by stable rental growth in relation to income from 2020 to 2024. The rent burden will hardly change at all. In Munich, the rent-to-income index only moved to 103.8 percent during the analysis period, in Frankfurt am Main to 103.1 percent and in Stuttgart to 101.8 percent. In contrast, the purchase price-to-income ratio in Munich fell significantly, peaking at 114.6% in the fourth quarter of 2021 and falling to 86.1%. In Frankfurt am Main and Stuttgart, the ratio of property purchase prices to average income also fell sharply by the end of 2024 - in Frankfurt am Main from a high of 105% in the fourth quarter of 2020 to 82.2%, and in Stuttgart from 110% in the fourth quarter of 2021 to 84.8%. This means that all three cities - including, surprisingly, Munich, traditionally the most expensive city in Germany - are seeing a noticeable easing in the purchase of property in relation to the average local income trend. This means that property buyers have better entry-level opportunities again, but tenants also have largely stable tenancies.

Sascha Hadeed, branch manager at the VON POLL IMMOBILIEN partner store in Gräfelfing and VON POLL COMMERCIAL Munich:

"From our point of view, now is a very good time to enter the Munich real estate market. Purchase prices have settled at a more moderate level, which in many cases means a noticeable discount compared to 2022. At the same time, Munich remains an economically strong and growing location with a high quality of life, which speaks for stable to rising property values in the long term. Those who buy now will benefit from this price correction and position themselves for a future upturn in the market."

Ralph Schenkel, branch manager at the VON POLL IMMOBILIEN Partnershop Stuttgart, has made similar observations:

"A clear correction can be observed in real estate purchase prices in Stuttgart: As a result, demand is also picking up again. Particularly for energy-efficient properties in good locations and for prospective buyers with solid financing options who see the current price levels as an entry-level opportunity. This clearly indicates a gradual return of confidence in the market. Those who plan for the long term and are financially well positioned can currently benefit from more realistic prices and better negotiating opportunities."

Fig. 3: Development of average rental and property purchase prices in relation to average income in the A-cities of Munich, Frankfurt am Main and Stuttgart from 2020 to 2024 - indexed (chart: von Poll Immobilien GmbH)

^1Thedata basis for rental and purchase prices is based on supply figures from the first quarter of 2020 to the fourth quarter of 2024 from empirica-regio (VALUE market data) and VON POLL IMMOBILIEN Research (2025)

2The data on income in the eight A-cities analyzed is based on evaluations of the average gross monthly salary from the Federal Employment Agency, empirica-regio (VALUE market data) and VON POLL IMMOBILIEN Research (2025).

^3Forbetter comparability between the data, the data was indexed and the base value was 100 in the first quarter of 2020.