1.4 million apartments are missing: Germany’s housing deficit reaches a record level

1.4 Million — the number that defines the German housing market

The housing deficit in Germany has reached a level in 2026 that stands without historical precedent in post-war history. The German Tenants’ Association estimates the total deficit at 1.4 million housing units — units that would be missing for a market-appropriate supply for the German population.

To reduce this deficit within ten years, 400,000 new apartments per year would be needed. In reality, only about 215,000 units were completed in 2025 — less than half of the demand.

The result is a self-reinforcing scarcity spiral: too little supply meets constant or growing demand, drives up rents, increases pressure on urban areas, and makes the political problem simultaneously harder to solve.

400,000 demand, 215,000 reality — how big is the gap?

The difference between demand and completion amounts to approximately 185,000 units per year. Accumulated over five years, this results in nearly a million additional missing apartments — adding to an existing deficit of 1.4 million. According to the Cologne Institute for Economic Research, its housing market study 2025 concludes that a total demand of 2.4 million new apartments will arise by 2030 — if current trends remain unchanged.

For comparison: At the current pace, only 1.3 million units would be completed by 2030. The coverage rate of demand is at just under 54 percent.

Regional asymmetry: Vacant East, Shortage West

The situation varies greatly by region. In western German urban areas, there is acute housing shortages:

• Munich: Vacancy rate below 0.5 percent — in effect, no available housing
• Hamburg: 0.7 percent vacancy, structural under-supply in the affordable segment
• Berlin: Officially 1.0 percent vacancy, but strongly concentrated in outer areas

At the same time, there is significant housing vacancy of up to 10–15 percent in shrinking small towns in structurally weak eastern German regions. This vacancy is functionally unutilizable — it occurs in regions where no one wants to move.

The deficit is therefore not a national phenomenon, but a mismatch between housing location and demand location. New housing must be built where it is hardest to build: in densely populated urban areas with high land prices, regulations, and resistance.

Why the housing construction crisis 2023–2025 is only now fully taking effect

Between obtaining a building permit and completion lie 18–36 months. The drastically reduced building permits of 2023 and 2024 (-30 percent compared to 2022) will only fully affect completion numbers in 2025 and 2026. The trough has not yet been passed.

The new construction crisis has several causes that are acting simultaneously: increased construction costs, high interest rates for project developers, bureaucratic approval procedures, a shortage of skilled workers in the construction industry, and insufficient federal funding. A turnaround is only realistic from 2027 onwards.

What this means for investors

A structural supply deficit of this magnitude is a fundamental tailwind for existing holders of residential real estate:

• Vacancy risk drops close to zero in in-demand locations
• Renter selection improves due to supply shortages
• Rent increase potential exceeds market average in A-cities
• Value appreciation is secured through structural demand surplus

Those who invest in residential real estate as an investment are doing so in 2026 in a market that represents the structural opposite of an oversupplied market. The risk does not lie in insufficient demand, but in regulatory interventions — such as rent law reforms or local rent controls.