The low point: 2025 and 2012 in direct comparison

The figure of 206,600 only becomes tangible in historical context. For comparison: in 2020 — the most recent peak — 306,376 dwellings were still completed in Germany. In just five years, construction output has thus collapsed by around 100,000 units per year. In 2012, at the low point after the financial crisis, there were 200,500 dwellings — the current figure has returned to that level.

Building permit statistics show even more clearly what lies ahead in the coming years: only 215,300 dwellings were approved in 2024 — a decline of 16.8 percent. Since an average of 26 to 27 months pass between approval and completion (2020: still 20 months), completions in 2026 and 2027 are already foreseeably low. The construction backlog — dwellings already approved but not yet built — amounts to 759,700 units, of which only 330,000 are actually under construction.

The 400,000 target: promised, never achieved

The traffic-light coalition had set the target of 400,000 new dwellings per year, including 100,000 social housing units, in its 2021 coalition agreement. Chancellor Scholz stuck to the target even under growing pressure. The result: the target was not even approximately achieved in a single year.

In 2024, completions reached 63 percent of the target — in 2025 just 52 percent. Construction Minister Klara Geywitz became the face of the construction crisis, and as early as 2023 Tagesspiegel called the 400,000 promise a “castle in the air”. Historically, an average of 405,000 dwellings per year have been built in the Federal Republic since 1950 — the current level is thus far below the long-term average.

Why is new construction collapsing? The five main causes

The interest rate turnaround

The ECB raised its key interest rate from 0 percent (2021) to over 4 percent (2023). Mortgage rates jumped from around 1 percent to 4 to 5 percent. For project developers with variable-rate debt capital and thin margins, this meant the end of many calculations.

Exploding construction costs

The energy crisis, inflation and supply bottlenecks since 2021 drove up material and labour costs sharply. Concrete, steel, timber — all significantly more expensive than at the offer-planning stage. Many projects approved in 2020 were no longer economically viable in 2023.

Wave of insolvencies

Real estate insolvencies rose by 70 percent in 2024. In the first quarter of 2024 alone, 630 real estate and construction companies went bankrupt — an increase of 18.6 percent compared to the same quarter of the previous year. The consequence: 320,000 jobs were at risk or disappeared.

Bureaucracy and approval procedures

Changing energy standards (Efficiency House 55 standard), the lack of a federal building code and cumbersome approval procedures structurally slow down construction projects. The average time from approval to completion has increased from 20 to 27 months since 2020.

Collapse in demand for owner-occupied flats

The interest rate turnaround reduced purchasing power. Project developers were left sitting on completed dwellings that couldn’t be sold — and cancelled their next projects.

Regional extremes: Berlin, Cologne, Munich

The IW Köln institute estimates an annual housing need of 372,600 units nationwide — only 206,600 were actually built in 2025. The annual gap thus stands at over 165,000 dwellings.

Regionally, extreme imbalances are evident:

Berlin: largest supply gap nationwide

Need according to IW Köln: 31,300 dwellings per year. Building permits in 2024: only 9,772 — that’s 31 percent of demand. No other urban district has a bigger absolute gap.

Cologne and Munich

Cologne has the worst coverage ratio among the metropolises: only 37 percent of demand is met. Munich fares best at 93 percent, yet thousands of units are still missing. Hamburg is the only positive exception, with +39 percent completions in 2024.

Eastern Germany: decline twice as severe

The decline hits the East with –34.3 percent (2025), more than twice as severe as Western Germany (–16.7 percent).

What the construction crisis means for rents and purchase prices

The housing gap has long since arrived in the market. Listed heritage properties in particular are gaining attractiveness in this environment. The Pestel Institute puts Germany’s housing shortage at 1.4 million units — a record level. By 2030, 2.4 million new dwellings will be needed.

Rents are reacting accordingly: nationwide, asking rents for new lettings rose by 7 percent in 2024, in Berlin by 10 percent — a total of 22.2 percent between 2022 and 2024. Munich stands at €20.50 cold rent per square metre (+4.4 percent). The DIW Berlin institute notes that the real estate market remains tight — rents and housing prices continue to rise.

For investors, this means: rental yields in German metropolitan areas are rising structurally — not because purchase prices are falling, but because supply is not catching up in the foreseeable future. Anyone investing now in existing properties or new builds in growth regions benefits from a market where the supply problem will not be solved before 2027 at the earliest. Anyone planning a purchase now should factor in the structural supply deficit as a long-term tailwind.

Video: housing market in turmoil

Outlook: when will the market turn around?

The signals are mixed. The Central Association of the German Construction Industry (ZDB) expects 215,000 to 220,000 completions in 2026 — hardly better than 2025. Positive completion figures are not expected before 2027 at the earliest.

A silver lining: building permits rose again in 2025 for the first time, by 10.6 percent to 238,100 — in September even by 59.8 percent compared to the same month of the previous year. Since permits precede completions by two to three years, this points to a moderate recovery from 2027 onwards.

Structurally, the problem remains: the IW Köln institute forecasts increasing market tension in major cities, even though nationwide demand is calculated to decline slightly from 2026. In metropolises such as Berlin, Munich and Hamburg, the gap persists — and is growing.

In five years, Germany has wiped out all the construction progress made since the financial crisis. The 400,000-dwelling gap will not be closed by political promises, but only once interest rates, construction costs and approval processes structurally return to a level that lets project developers make their calculations work. Exactly when that will happen remains open.

Explainer video: 3 advantages in 4 minutes

Tip! Don’t miss anything, subscribe now on YouTube: Lukinski!

Advantage 1: protection against inflation

Inflation can quickly devalue your savings. For example, if you have €100,000 and inflation is at 5%, you lose 5% of your money every year. After two years, your €100,000 is worth only €90,500. Real estate offers effective protection against inflation, because rents usually rise with inflation. If inflation is at 5%, your rental income also rises by 5%. This means you benefit from rising rental income in the long term, and your investment is protected against the effects of inflation.

• Assets: €100,000
• Inflation 5%, purchasing power after 1 year: €95,000
• Inflation 5%, purchasing power after 2 years: €90,500
• …

Bonus tip! The effect of inflation on loans and repayment

Suppose you’ve taken out a loan of €100,000. In times of inflation, your money gradually loses value. This means your money’s purchasing power decreases while prices for goods and services rise.

Here’s the interesting part: while prices rise and incomes increase, your loan’s monthly repayment rate stays unchanged. This means that over time you keep repaying the same fixed instalment, which decreases in real purchasing power.

This has two important effects:

Your debt gets “devalued”

Inflation causes your debt to decrease in real terms. This means the originally borrowed loan amount of €100,000 is worth less in real purchasing power over time. In other words, you effectively repay less once you factor in inflation.

Rising income can make repayment easier

If your income rises over time due to inflation, it becomes easier to manage your monthly repayment instalment. This means you may have more financial leeway to make other investments or reach your financial goals faster.

Advantage 2: your tenant pays off your investment

One of the best features of real estate investments is that your tenants pay off your investment. The bank grants you a mortgage loan that you don’t have to earn yourself. Your tenant pays the monthly rent, which covers part of the financing. Once the financing is paid off, the property belongs to you entirely. On top of that, you benefit from the appreciation of the land. Even if land prices rise by only 5% per year, these gains add up over the years to a substantial sum of additional wealth.

• You only need 20% equity
• The bank provides the rest (debt capital)
• Who pays your loan? Your tenants!

Remember this sentence forever:

Your tenant pays off your investment!

Advantage 3: passive income

As soon as your monthly rental income covers your monthly costs, you generate passive income. This means you earn extra money every month without having to work actively. This passive income can help you achieve financial independence and give you the freedom to enjoy more of your life. For example, if you have monthly costs of €1,000 and monthly rental income of €1,100, you generate a monthly passive income of €100.

• “Costs” of your property p.a. = €12,000
• Net cold rent p.a. = €13,200
• Surplus = €1,200

Why does a property make sense as a capital investment?

Hopefully you no longer ask yourself this question after these 3 key advantages!

Real estate investments offer effective protection against inflation, the opportunity to build wealth while your tenant pays off the investment, and the chance of passive income. If you enjoyed this video, don’t forget to like it and subscribe to my new channel. Stay tuned for more insightful content on real estate investing. Thank you for watching!

Tip: Capital investment guide

Buy a villa in Berlin: Tips & Offers

In the world of luxury real estate, discretion is paramount. Exposés of first-class villas (5 million euros and more) are not found on conventional real estate portals. Celebrities, industrialists, and public figures value discretion and therefore rely on real estate experts with an internal buyer circle and filtered communication channels. Grunewald, Dahlem, Wannsee, Nikolassee or also city locations in Charlottenburg or Schöneberg, we start with the tips. Moreover, my villas in Berlin, if you are looking for them, you have the option to discover exclusive gems in Berlin.

By the way, for For Seller, I am always looking for villas in Berlin for my clients. Contact me Contact us without obligation.

Here you will find tips & Villas in Berlin.

1. Buy a villa: Tips, process up to the handover of keys
2. Villas in Berlin: My offers for you
3. Purchase process, districts & Co.

Buy a villa: Townhouse, town villa or outskirts of Berlin

Are you longing for a luxurious lifestyle with lots of space and privacy? A villa offers exactly that. You can live in a generous estate that offers all the comforts. However, the costs for the purchase and maintenance are often significantly higher than for other types of houses. A villa requires a considerable financial investment and regular care to maintain its shine.

My guides for you:

• Build or buy a villa?
• Buy a villa

Villas in Berlin: Off Market by Lukinski

Tip! Looking for a villa in Berlin? Take a look at my Off Market portfolio:

• Villa in Berlin

3 current examples! Villas and townhouses that might interest you:

• Villa 3.05 Mio. € – Grunewald
• Art Nouveau villa, 9.7 Mio. € – Nikolassee
• Townhouse 12.41 Mio € – City location

A hidden gem in the luxury real estate market is “Off Market” – an exclusive niche where properties are discreetly traded. Here, villas are offered before their official listing. Prices for these exclusive properties have risen significantly in recent years due to increased demand and the low-interest rate period. However, the market for luxury villas remains attractive.

More about our Off Market properties can be found here:

• Off Market Real Estate

Process: Explained Step by Step

Buying a villa is a structured process, similar to a typical house purchase, which includes various steps. More about additional costs of house purchase and how to plan for them. From the initial budget planning through the active property search to the handover of keys – each step is crucial for a successful completion.

Buying a villa – The step-by-step process explained:

Find the right villa: Checklist

When buying a villa, various factors play a decisive role. The location of the property, the size of the plot, the room layout, equipment and extras, as well as security and accessibility aspects are just some of the points to consider.

• Location
• Size of the plot
• Room layout
• Equipment
• Security of the surroundings
• Accessibility of the villa

Purchasing a villa comes with various cost factors that need to be taken into account. In addition to the purchase price, there are also purchase-related costs, including real estate agent commission, notary fees and land transfer tax. A detailed financial plan is essential to avoid unpleasant surprises.

Let’s take a closer look at the individual cost items in the next step.

Purchase price and typical purchase-related costs: Overview

When buying a villa, costs arise that consist of 1) the purchase price of the property and 2) the purchase-related costs. However, be careful: Part of the purchase-related costs is the same in all federal states. The other part varies depending on which federal state you buy your villa in. In addition, if you work with a real estate agent, there is the agent’s commission. In a private sale, this is split between buyer and seller.

But how high are the purchase-related costs in Berlin? Here’s an overview:

• Land transfer tax: 6.0%
• Notary fees: 1.5%
• Land register entry: 1.5-2.5%
• Agent’s commission: 7.14% depending on the purchase price

Where to buy in Berlin? Most exclusive locations

Spacious plots, majestic avenues, and representative estates define the charm of Berlin’s most luxurious neighborhoods. If you’re looking for a villa in Berlin’s most expensive areas, you will find them, among others, in the districts of Grunewald and Dahlem. These neighborhoods offer not only excellent quality of life but also an exclusive living environment characterized by peace and elegance.

Here is a selection of Berlin’s most exclusive neighborhoods:

• Grunewald
• Dahlem
• Wannsee
• Weißensee
• Charlottenburg
• Schöneberg
• …

Berlin has many beautiful areas, but the hotspot is located in Weißensee, Grunewald, Dahlem to Nikolassee.



Townhouse, villa in the southwest, please feel free to contact me: Contact us.

Buy a villa in Berlin: What is important

Buying a villa in Berlin is not only an investment in exclusive living comfort, but also in a representative lifestyle. The city offers a wide range of villas in various locations, so there is something suitable for every taste and requirement. Thorough planning, expert advice, and transparent financing are key factors to successfully realize your dream of owning a villa in Germany’s capital, Berlin.

My Selection: Off Market Luxury Properties

Here you will find an excerpt from my Berlin portfolio:

• Villa in Berlin

Germany’s AAA location: Berlin

Anyone buying their first property is looking for an immediate return. If you have time, you can make impressive profits in Berlin. Tax-free for owner-occupiers after just 3 years. For owner-occupiers, for investors, Berlin is the place to be in Germany and nothing will change.

Berlin real estate market: A market with exceptional value growth.

This makes Berlin not only the place to be, but also a hotspot. The most expensive streets in Berlin are mainly in Mitte and the southwest, as far as Wannsee and Potsdam. No other German city sees more investment. But how have buyer prices (for houses) developed?

A look at purchase price trends over the last 10 years and what you can learn from them for your investment in Berlin.

Are you looking for one or more investments in Berlin? Write to me or give me a call: Contact.

Why do many domestic and foreign investors love Berlin?

The impressive rise in real estate values in Berlin

The development of property prices over the last 10 years is remarkable: from an average value of 2,070 euros per square meter, prices have risen to 5,114 euros per square meter, which corresponds to an impressive increase of 147% (official data: Federal Statistical Office). Even in shorter periods such as 5 years (increase of 51% to 3,378 euros/m²) and 3 years (increase of 20% to 4,249 euros/m²), the enormous growth potential of the Berlin real estate market is evident.

Berlin: +147 % price increase in 10 years

The figures illustrate the long-term value creation of Berlin real estate:

• 10 years: Increase from € 2,070/m² to € 5,114/m², which corresponds to an increase in value of 147%.
• 5 years: Increase in value from € 3,378/m² to € 5,114/m², an increase of 51%.
• 3 years: Improvement from € 4,249/m² to € 5,114/m², an increase of 20%.

Tax-free sale: Example of personal use

Saving taxes in Germany is not that difficult. For example, through personal use. Calculate the increase in value, a great investment with a lot of security.

• Investment sum: 13 million euros
• Tax-free sale possible after 3 years for private use.
• An increase from EUR 13.0 million to EUR 15.6 million was realized for non-rented properties, which corresponds to a
• This corresponds to anincrease in value of 20.3% or EUR +2.639 million in 3 years.

PS:

• Long-term letting: A combination of rental income and capital appreciation can lead to considerable increases in assets after 10 years(speculation period).

Rental yield compared to value appreciation

Despite a current rental yield of just 1.2% with an average basic rent of 13,500 euros per month, the long-term performance illustrates the true profit potential. Over a period of 5 years, the rent adds up to 810,000 euros and over 10 years to 1,620,000 euros, making the property not only an ongoing income stream but also a valuable asset.

You can invest in Berlin apartment buildings or in private real estate for your own use, such as villas in Berlin.

Townhouses, residential and commercial buildings in Berlin.

Exclusive villas in the southwest of Berlin.

Tax benefits for private use and rental

One of the biggest attractions of the Berlin real estate market is the tax incentives. For private use, the German tax system allows a tax-free sale after just three years. Regulated by the speculation tax. This means that a non-rented property purchased for 13 million euros can be sold for 15.6 million euros after an increase in value of 20.3% – a tax-free profit of 2.639 million euros.

Strategic investment approaches for landlords

For landlords, the ten-year holding period for a tax-free sale offers a long-term investment opportunity. Through the combination of rental income and capital appreciation, a landlord can realize significant asset growth after 10 years. This underlines the importance of choosing the right time to buy and sell in order to make the most of market opportunities.

Conclusion: Long-term prospects in the Berlin real estate market

The data speaks for itself: the Berlin real estate market offers enormous potential for investors with a long-term perspective. Although rental yields may be moderate at the moment, the continuous increase in value and tax advantages ensure that patience and a strategic approach pay off. Berlin therefore remains a top address for real estate investors with foresight.

More about investments in Berlin

Read more about investments in Berlin here:

• Buying a villa in Berlin
• Berlin’s most expensive street
• Real estate as a capital investment
• Off Market Real Estate Berlin

Living in Westend: Upscale district with elegant flair

The main street of the Westend is characterized by unique cafés, award-winning restaurants and luxurious boutiques. This is not only important to the local companies and businesses, but also to the residents of this exclusive residential district. No wonder: after all, only the wealthiest of the city were drawn here in the 19th century. Since then, the Westend has retained its reputation. Well-tended green spaces and awe-inspiring mansions make up the cityscape here.

Welcome to Frankfurt: International metropolis in Hesse

Frankfurt is considered one of the most impressive cities in Germany. Modern skyscrapers adorn the skyline of the city center, the banking district, home to many major German and European banks, offers plenty of job opportunities and the multitude of exclusive boutiques and culinary delights from all over the world inspire not only long-established Frankfurt residents, but also newcomers from all over Europe. The economic strength of the city, as well as its prime location, make Frankfurt one of the most important and international metropolises in Germany.

Westend: Map & Location

The Westend is located close to the city centre of Frankfurt and therefore not far away from the other sought-after districts Nordend, Gallus & Co.

Here map and location of the Westend:

Sights, Monuments & Co.

The upscale Westend is not only home to a variety of historical monuments and sights, but also plenty of green spaces and parks that make up the charm of the district. While the Botanical Garden is home to over 5,000 species of plants, the Palmengarten invites you to take an exotic tour of the tropics. The third largest park in the city, the Grüneburgpark, is also at home here.

The following sights are right on your doorstep in the Westend:

Sightseeing: A tour of the Westend

The Westend is not only a working district, but also one of the most attractive places to live in Frankfurt. While the many green spaces and parks invite you to go for a walk, Goethestraße with its upscale luxury boutiques from all over the world offers a shopping experience of the extra class. Join us on our tour through the Westend.

Read more here! Frankfurt: Most expensive streets

Goethestraße: Exclusive shopping street – Dior, Armani, Gucci & Co.

Luxurious residential area: mansions, villas & co.

Real Estate & Prices per Square Metre in Westend

You would like to buy a house in the elegant Westend? Much more: Buy a multi-family house directly as a property as an investment, to then rent it out lucratively? In the Westend, both houses and apartments enjoy great popularity. While you have to reckon here for houses in the new building and old building with square meter prices between 3,000 and 4,700 euros, apartments are somewhat more expensive: Here fast times between 10,300 and 14,500 euros become due. Especially if craftsmen, architects & Co. were on the job shortly before the sale, you have to expect a higher sales price.

Here are all prices at a glance:

• Buy a house (existing): 3.890 €/m²
• Buy a house (new construction): 3,570 €/m²
• Buy apartment (existing): 9,122 €/m²
• Buy apartment (new construction): 12,673 €/m²

Conclusion: Living & Housing in Westend

Living and housing in Frankfurt – Especially the Westend impresses with its breathtaking architecture of past times, the well-kept green spaces and the luxurious Goethestrasse. Frankfurt’s real estate market is booming. This is also reflected in the real estate prices in Frankfurt. Life in the Westend is exclusive and discreet. This not only inspires young families with children, aspiring singles and investors, but also many a famous face from film, television, sport and music. Apartments are the most popular here. Although the prices per square metre are among the most expensive in the entire city, they are well worth it.

Frankfurt am Main: Real estate in the financial metropolis

Frankfurt is definitely the most impressive German city. If you stand in the Frankfurt city center, you drive in here, the skyscrapers are something very impressive. This makes the city seem twice as big as Berlin, three times as big as Munich and four times as big as Cologne. The attractive location directly on the Main and in the centre of Central Europe continues to attract people from all over Germany and the world to the city. Frankfurt a.M. is known for its unique skyline, skyscrapers and a thriving financial market. But the city offers so much more. Museums, green spaces, the opera, art halls. Culture as far as the eye can see.

Real estate in Frankfurt

With its opera, theatres and museum mile, Frankfurt has everything that high culture needs. In addition, a decent gastronomy scene, which in terms of internationality has no comparison in the world. There are beautiful parks in the city, as well as the zoo and the Palmengarten, so that you don’t have to leave the city for a short rest. The banks of the Main River invite you to stroll along, in addition to the chic shopping galeries. The skyscrapers are also an attraction in themselves. And if you visit one of the numerous festivals in the summer, it’s hard to get away from the view of the skyline.

• Real Estate Frankfurt

Living in Frankfurt am Main: Popular districts & residential areas

With a population of less than one million, the metropolis in the Rhine-Main region is known worldwide and is home to Germany’s second largest airport. No wonder, after all, Frankfurt is considered an attractive place to live. While the up-and-coming Gallus convinces with its hip flair and excellent location, the Westend and Nordend inspire with their elegant charm paired with historical flair. Find out everything about Frankfurt’s most popular districts, their locations and prices per square metre here. To the overview: Living in Frankfurt am Main

• North End
• West End

Sell, buy and live in Frankfurt am Main

Whether modern Nordend, up-and-coming Gallus, international Westend or the popular neighbouring town of Offenbach, with the current price trend it is worth selling your property in Frankfurt! You want to sell your apartment, your apartment building or your land in Frankfurt? Find out here what you need to bear in mind when selling your property in Frankfurt. In addition: Our free guides and tips on the topics of property valuation, off market and all prices per square metre in Frankfurt – Welcome to Frankfurt! To the overview: Selling real estate in Frankfurt.

• Gallus
• Ostend
• North End
• West End
• Offenbach