faq
Housing costs in particular are responsible for the fact that life in Germany varies in price. The Munich and Frankfurt areas are particularly expensive. But where can you live particularly cheaply?
The cost of living in Germany varies significantly depending on the region. Where it is cheap or expensive to live depends primarily on the cost of living. If you take this factor into account, it is 38 percent more expensive in the most expensive city of Munich than in the cheapest district of Vogtland in southwest Saxony – this is the result of a current study by the German Economic Institute (IW) and the Federal Institute for Building, Urban and Space Research (BBSR). Without housing, however, the cost difference between the extreme values is only 6 percent.
Where is it most expensive and where is it cheapest?
Including housing costs, the Bavarian capital is a quarter (25.1 percent) more expensive than the German average, followed by the Munich district (16.7 percent), Frankfurt am Main (15.9) and Stuttgart (14.8). The cheapest place to live, however, is in the Vogtland district in Saxony and in the city of Greiz in Thuringia, which are 9.5 percent below the national average. This is followed by Görlitz (9.4) in Lusatia as well as Pirmasens (Rhineland-Palatinate) and the Salzlandkreis in Saxony-Anhalt with 9.3 percent.
Without housing, Stuttgart is the most expensive, but only with a 4.2 percent premium over the national average. Behind them are Munich (2.1), Aschaffenburg (1.8) and Freiburg (1.6). The study identified the lowest costs in the Leer district, where it is 1.7 percent cheaper, followed by Ostprignitz-Ruppin and Nordhausen (Thuringia) with 1.6 percent each.
What pattern is there? Cost of living?
Due to the strong role of housing costs, it is particularly the large metropolitan areas and surrounding districts that are expensive. There are also attractive residential areas, for example on the edge of the Alps or Lake Constance. The eastern federal states, on the other hand, are usually significantly cheaper than average, with the exception of Berlin and the surrounding area.
The fact that the costs in some of the heavily populated cities are far above average is pulling the entire index up. This leads to the surprising result at first glance that of the 400 cities, districts and districts, 274 are cheaper than average. Only 124 are more expensive, two are practically exactly on average. But a very expensive Munich compensates for dozens of sparsely populated, cheap districts in the statistics.
Why are the differences without housing so small?
In many areas of the cost of living there are little or no regional differences, as Christoph Schröder from the IW explains. As examples he cites orders on the Internet, groceries from discounters, clothing from fashion chains and supermarkets’ own brands.
On the other hand, the researchers found larger regional differences in restaurants and hotels, but also in the costs of care or insurance, as IW expert Jan Wendt says. But the amount of relatively stable other costs dampens their impact.
Accordingly, of the 400 districts, districts and cities recorded, the vast majority are very close to the national average without taking housing costs into account. Only 60 differ by more than 1 percent.
Housing makes the difference so much greater because housing costs have a high weight in the so-called shopping basket. And the differences are also very large: in Munich, housing costs are 180.9 percent of the national average, more than two and a half times as high as in the Vogtland district (68 percent). This is reflected in the numbers accordingly.
What conclusion do the study authors draw?
“Life must remain affordable, no matter where in Germany,” says IW study author Christoph Schröder. “The state covers the housing costs for those in need, which relieves the burden in the right places and leads to a strong regionalization of transfer payments.” However, the results also showed that regional policy still has to do some homework.
Since high housing costs are such a burden for residents of large cities, it is helpful to redirect demand to the surrounding areas, for example through better infrastructure. In order to build more and more cheaply in places where there is a lack of housing, densification, new construction and building land planning should become easier, the experts advise. This requires relief when it comes to bureaucracy and building regulations.
How was the data collected?
Collecting price data for a wide variety of goods and services in 400 districts, districts and independent cities is extremely complex given the wealth of information. IW and BBSR have worked on the development of their price index for three years and partly use automatic data queries on the Internet – so-called scraping. This resulted in 24 million data points, as Wendt explains. The data status is 2022.
There are certain limitations to the accuracy of the data, as regional prices could not be collected for all goods. These include personal services, fresh flowers or some household goods. Their weight in the market basket for the index is 14.7 percent, but the authors assume that their absence hardly changes the results. The same applies to some districts in which there was no regional data from supermarkets, which is why average values from districts with a similar structure were used here.