Unaffordable rent, housing a luxury in Germany?

2023-08-03 13:47:00, Kosova & Bota CNA

Anyone looking for an apartment in a good residential area in Berlin must have a lot of money. "For rent immediately" is written on an online platform "a wonderful spacious apartment with 4 rooms" in the neighborhood of Charlottenburg is on offer. 182 square meters furnished, monthly rent 8,190 euros. Plus the costs of heating, electricity, water and other services increase the price to 50 euros per square meter.

As an affordable social rent in Germany is currently considered between 6.50 and 7.50 euros per square meter. But at such a price you can't even find the "offer of the month" in Berlin at the moment. At such prices, apartments with 96 square meters are currently offered in the easternmost edge of the city with a monthly rent of 725 euros. Since the apartment is located on the sixth floor without a lift, "a sporty family" is required. If possible, the family should be able to use the construction work, because the apartment needs to be renovated.

Unaffordable rent, housing a luxury in Germany?

The rent swallowed up the monthly income

According to the Federal Statistical Office, the average net income in Germany, i.e. what remains after deduction of taxes and social security contributions, is 2,165 euros. About a third of the income is spent on rent. However, when it comes to new rentals, this is often no longer enough.

In Munich, a square meter costs 19 euros for rent, in Stuttgart 18 euros, in Düsseldorf and Cologne 12 to 13 euros and in Berlin 11 euros. "High demand for affordable living space complements historic rental growth and supply that is very tight," said a current statement from online portal Immoscout24.

Fewer buyers, more renters

Germany is traditionally a land of rentiers. While the ownership rate in Europe averages around 70 percent, in Germany only 46 percent live in their own private homes. In big cities this quota is even lower. In Hamburg only 22 percent live in their own house, in Berlin even only 14 percent.

In Berlin there were also demonstrations against high rents: Housing costs increase every year in big cities.

Real estate prices are rising around the world. The Ifo Institute and the Swiss Institute for Economic Policy predict that in the next ten years, an average increase of nine percent should be calculated. For Germany, an increase of seven percent is predicted. Along with the increase in interest rates on loans, this makes buying a house unaffordable. Therefore, renting an apartment remains an alternative. This exacerbates the shortage in the rental market and drives further price increases.

Unaffordable rent, housing a luxury in Germany?

Why is the housing market so tense?

According to a study by the Eduard-Pestel Institute for system studies in Germany, more than 700,000 apartments in the affordable price segment are missing. The government has declared that it will take care of the construction of 400,000 new homes every year. In fact, this year a little more than half will be achieved, while in 2024, reaching the objective will be significantly more difficult. This was calculated by the Institute for Macroeconomic Studies and the Economy, which is close to the trade unions.

The war in Ukraine and inflation have driven up construction costs. Experts predict that it will be almost impossible to build at a cost of less than €5,000 per square meter. There is a shortage of workers and construction materials, work is being stopped at construction sites. In May of this year, the number of construction permits fell by 25.9 percent compared to the same month of the previous year. Meanwhile, in Germany there are very few state-sponsored social housing. Such were built mainly in the years 1950 to 1970, while the last decades not at all.

Social associations demand regulation of the rental market

Social associations warn that housing is increasingly becoming an existential issue in Germany. This creates potentially explosive tensions in society. A housing at a reasonable price is a human right, these associations emphasize.

State controlled rents? Most citizens consider this to be positive. But the Constitutional Court in 2020 rejected the rent rationing applied in Berlin. Through a request in parliament it is now again demanded that housing policy be a public and state duty of high priority and that through the regulation of rents with a ceiling, more fairness is created in the real estate market for housing. On the other hand, critics draw attention to the fact that such a rationing would inhibit construction, because without the lure of financial gain, investors could be cheated./ DW