Status: 12/12/2022 8:22 a.m
According to a recent analysis, rents in Germany have recently risen more sharply. Among the federal states, Mecklenburg-Western Pomerania is particularly affected. When it comes to cities, Berlin stands out.
The rise in rents for apartments in Germany has accelerated again after a phase of relatively moderate growth. According to data from the German Economic Institute (IW), in the third quarter asking rents rose sharply on average by 5.8 percent compared to the same quarter of the previous year.
That was more than the average for the third quarter of the past three years (plus 4.5 percent). In all federal states, growth exceeded the medium-term trend. Rents in Berlin rose particularly sharply.
Rents have risen sharply, especially in Mecklenburg-Western Pomerania
“It shows that the momentum is increasing,” said IW real estate expert Michael Voigtländer. People were increasingly looking for rental accommodation, while some landlords were charging higher rents, apparently because of high inflation. In addition, there are catch-up effects in rural regions that still offer comparatively cheap housing.
Among the federal states, asking rents rose the least in Baden-Württemberg, Saxony and Hesse, at a good four percent compared to the same quarter of the previous year. They climbed the strongest in Saarland (plus 7.9 percent), in Brandenburg (9.1 percent) and Mecklenburg-Western Pomerania (10.3 percent).
The annual comparison of asking rents was based on almost 1.5 million advertisements on major real estate portals. They don’t mean deals yet, but they show the direction in the market. Also, rents can rarely be negotiated.
Cancellations in residential construction are increasing
According to IW, there were relatively moderate increases in asking rents in the metropolises in Frankfurt (plus 1.4 percent compared to the same quarter of the previous year), Stuttgart (2.4 percent) and Munich (3.5 percent). On the other hand, asking rents in Düsseldorf (5.9 percent), Leipzig (7.8 percent) and Berlin (8.3 percent) increased in particular. In the capital, the increase was almost twice as high as the average increase in asking rents in the third quarter of the past three years (plus 4.2 percent).
“In the very expensive cities, the growth is lower – probably due to a lack of solvency,” said Voigtländer. After years of the real estate boom, rents in the major cities have already reached a very high level. Higher lending rates, high construction prices and record inflation are making home ownership less affordable. This is reflected, for example, in the number of cancellations in residential construction.
According to a current survey by the ifo Institute, 16.7 percent of the companies surveyed were of cancellations. “The companies still have well-filled order books, but the ever-increasing construction prices, higher interest rates and fewer funding options are weighing on new business and have been leading to a noticeable number of cancellations for several months,” says ifo researcher Felix Leiss. Interest rates on ten-year real estate loans have more than tripled since the beginning of the year.
Geywitz calls for rethinking when building homes
Many people are therefore switching to the rental market. The shifting demand will increase the upward pressure on rents there, according to a recent study by Landesbank Helaba. New contract rents have recently risen more sharply with growth of around five percent over the year, as also observed by DZ Bank and the Association of German Pfandbrief Banks (vdp).
The reason for the “noticeably increasing rents” is not only the shift in demand but also the increasing immigration with many refugees from Ukraine, according to DZ Bank. A high demand for affordable housing meets falling vacancies in the cities.
Meanwhile, Federal Building Minister Klara Geywitz is calling for a rethink when building homes. The SPD politician referred to an earlier statement of hers that it makes no economic or ecological sense for each generation to build their own houses alongside the individual houses of the previous generation. “Mathematically, that’s very clear. If we think three or four generations ahead, we can’t all have these single-family home areas next to each other,” she told the “Augsburger Allgemeine”. “That’s why we have to get this cycle of use of the houses going again and put a lot into redevelopment funding.”