Real estate experts expect rents to continue rising in 2024. In the eight largest metropolises in Germany, rents rose by 8.4 percent in the third quarter compared to the same period last year.
Given the lack of housing and high levels of immigration, experts expect a significant increase in rents in Germany in 2024. However, there are likely to be further reductions in real estate prices; there is particularly great pressure on properties with poor energy performance, also due to uncertainty surrounding the heating law.
“For 2024, we expect a continued high level of political uncertainty and see little scope for stimulus in new residential construction,” says Roman Heidrich, expert in residential property valuations at major broker Jones Lang LaSalle (JLL). The excess demand will become even worse, particularly for rental apartments.
Rents in major cities are climbing
In the third quarter, rents in the eight largest cities in Germany rose by 8.4 percent compared to the same period last year, show new data from JLL for the dpa news agency. There was an increase of 3.8 percent in the second quarter. Rents also rose sharply year-on-year in other major cities – for example in Mannheim (5.7 percent), Bonn (4.8 percent), Essen (5.2 percent) and Wuppertal (5.7 percent).
The increases were greater than in the rest of urban areas and in village areas – there rents grew by a good four percent year-on-year and less than two percent compared to the previous quarter.
“We assume that rents will continue to rise in the medium and long term, as demand in most regions of Germany will continue to significantly exceed the shrinking supply of new apartments in the next few years,” said Heidrich.
Because of the increased interest rates and high construction costs, many people are switching to rental apartments – the fall in purchase prices does not compensate for more expensive loan installments. Germany is already the only EU country with more renters than owners – more than half of the people rent.
The record high immigration in 2022 has increased demand for housing even further. According to the Federal Statistical Office, rent is the largest expense item for many households.