Apartments in Munich, Berlin, Hamburg and Frankfurt already cost the equivalent of 10 to 15 years' earnings. And those prices are rocketing, according to a study for the German Postbank.
In Hamburg, apartment prices rose by 70 percent between 2010 and 2015. They are expected to surge by another 50 percent by 2030. A three-room flat can cost around $450,000 (400,000 euros) in residential areas close to the city center.
Even though most people still rent their apartments, real estate is an increasingly attractive option. Rents have risen for years. With interest rates at record lows, many feel they may as well borrow money to buy their own property.
Many investors also now view bricks and mortar as a far safer and more lucrative investment than shares, which have suffered from huge volatility in recent years.
As a result, rents and property prices are rising simultaneously. This puts real pressure on people on low or average incomes. Young families in particular can have real difficulty finding an affordable apartment with enough space. There are flyers pleading for help with the flat hunt on lampposts all over the city. Some are so desperate that they offer 500 or even 1,000 euros just to find a place to live.
Apartment viewings often turn into mass events, with 50 or 60 would-be tenants turning up at an appointment. Many bring application portfolios with detailed information on their earnings, their creditworthiness and their family situation. There are only 92 apartments for every 100 households in Hamburg.
Government needs to do more to control the rents?
Almost everyone walking along the scenic Isekanal in Eimsbüttel, a popular part of the city, has a story about their long and expensive apartment search. One woman says she has just managed to buy a house in order to leave the pricey rental market. Another passer-by says it took one and a half years before she and her husband were able to rent a flat:
"Either they are too expensive or someone else gets them. In the end we found an apartment through our relations. But we spent 18 months searching, with application folders and so on. In the end you get really fed up. We both earn decent wages, and I would have thought it would be simpler. The rents are crazy."
Another woman feels that the government needs to do more to control the rents. "People just can't afford it. They have to have two salaries and even then they can't make ends meet."
The federal government has tried to slow down rent increases by letting tenants provide but the measure has not yet made a noticeable difference.
Hamburg's administration has just pledged to give the go-ahead for 10,000 new apartments each year. A proportion is to be let at lower rents. Like many big cities, Hamburg is witnessing an influx of residents and a shortage of living space. More than 100,000 people are expected to arrive by 2030.
They come to find jobs or a better life. The city's economy is thriving. There has been a 15-percent increase in employment over the past five years. Many of those employees are well-paid and willing to buy apartments in the wealthier areas.