Housing prices: inner cities are becoming a luxury

City centers are becoming a luxury

Apartments here cost up to 27 percent more

The dream of living in the center is becoming unattainable for many. A new analysis shows how much prices have shifted.

Anyone who wants to buy an affordable apartment increasingly has to move to the outskirts. According to a study by the Kiel Institute for the World Economy (IfW), the prices of apartments in city centers rose above average last year. On average, they were around 27 percent more expensive than apartments in peripheral locations, the research institute said. In 2024 the difference was still 25 percent.

In the long term, real estate prices within the city limits have diverged significantly: in 1990, according to the Kiel Institute, centrally located apartments were only five percent more expensive than non-central apartments. This premium has since increased more than fivefold.

The project manager of the Greix research project, Jonas Zdrzalek, said he suspects that apartment prices in city centers react comparatively more strongly to interest rate changes. “After prices in the city centers fell disproportionately during the phase of rising interest rates, we are now seeing a countermovement.”

In 2025, city center apartments in Düsseldorf and Munich became comparatively more expensive, where prices increased by four and three percentage points compared to the outer districts. Berlin was an exception: There, prices rose more sharply in peripheral locations; the difference was one percentage point.