Rents are rising and rising. Exclusive data shows which regions are most affected. There are solutions, but not for free.
Berlin – The German housing market is in a serious situation. New construction is collapsing and there is already a shortage of around 600,000 to 700,000 apartments, and the trend is rising. As real estate market data from the empirica research institute available exclusively to
IPPEN.MEDIA
shows, rents are literally exploding in some regions of Germany.
Map shows: Rents are exploding here in Germany
In order to check how rents are developing in Germany, empirica evaluated the basic rents of renovated apartments between 60 and 80 square meters from over 100 advertising sources. The result: In every single district, rent has increased over the past ten years - not an unexpected development in itself, given rising wages and inflation. The map shows how much prices have risen.
When looking at the cost development, it is noticeable that there is a clear difference between the new and old federal states. Rents in Bavaria, Hesse and North Rhine-Westphalia, for example, have risen more in percentage terms than in Thuringia or Saxony-Anhalt. The exception is Brandenburg. When it comes to the relative increase in rent prices, Brandenburg is in first place among the regional states. The average rent in the Dahme-Spreewald district has more than doubled within ten years.
Munich: Rental price per square meter is approaching the 20 euro mark
This is mainly due to influx into Berlin's suburbs. But rents have also almost doubled in the capital. In addition to the price increases, the absolute rental prices also provide new insights. The square meter costs the least in the Saxon Erzgebirgskreis at around 5.50 euros. People in the Munich urban district continue to pay by far the most rent at around 19.40 euros per square meter. Rental prices there rose again by a whopping 6.50 euros per square meter - only in Berlin were they higher at around 7.20 euros.
The price per square meter in the capital has risen more than twice as much as the national average. In ten years, rents in Cologne and Stuttgart have risen more than in Hamburg, and the two cities are now more expensive than the Hanseatic city.
In terms of absolute rental prices at the state level, Bavaria will be in first place among the regional states in 2024, just as it was in 2014. Hesse is in third place. In Bavaria the rent increased by almost four euros per square meter, in Hesse by around three.
New housing construction in Germany has come to a standstill: “The situation will not get better”
The fact that the rental market in Germany is in a difficult situation is not a new finding. Roman Heidrich, residential real estate expert at JLL, also knows this. “The situation will not ease in the foreseeable future – simply because too few apartments are being built,” says Heidrich. Rental prices are based on supply and demand - with supply not keeping up with demand for years. “The required apartments will not be built in the next few years. The situation is difficult and will not get better,” states Heidrich.
What is striking about the empirica data is that rents are also rising in structurally weak regions from which many people are moving and which have many empty apartments. “Inflation also plays a role there, wage costs are rising there too and buildings are being renovated and modernized, which is driving up rents,” says Heidrich and predicts a bleak future: “Especially in rural areas we see markets developing apart . While the interior of old buildings in smaller cities is becoming more expensive, more and more apartments are empty in outlying areas.”
What measures could help?
So what can be done to bring the escalating rents back to normal inflation rates? According to real estate expert Heidrich, land prices and construction costs are currently easing somewhat. But that alone won't be enough. “New housing construction must become more attractive.” According to Heidrich, both the private sector and the federal government are responsible.
“Political funding is worth considering - at the same time, the federal government already lacks the money and the question arises as to where these billions in funding should come from,” says Heidrich. He points out that Berlin has recently provided some incentives. “What would massively support new residential construction would be to reduce the VAT for new rental residential buildings from 19 to seven percent. That would make building new housing significantly cheaper in one fell swoop and it would be a simple and quick lever.”
A bitter future outlook for the housing market
But the expert knows that it's not that uncomplicated: "However, that's a state matter and in this context it has to be taken into account that the construction industry is a significant economic factor for the state." This means that when the states reduce VAT, it comes at a time of strained budgets Billions in taxpayer money lost. The housing market will probably remain a problem child in the future.