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MONEY

Lack of cheap flats risks creating ‘luxury ghetto’

Düsseldorf risks becoming a “luxury ghetto”, as it does not bother to use its social housing budget, leaving the city centre to developers, a housing official warned.

Lack of cheap flats risks creating 'luxury ghetto'
Photo: DPA

Düsseldorf’s particular lack of housing for lower-income residents was highlighted on Monday when regional paper the Westdeutsche Allgemeine Zeitung (WAZ) reported that the city had spent just €28 million on social housing over the past three years.

In 2010 the city used just €4 million of its €15 million housing subsidiary budget, something North-Rhine Westphalia state Urban Development Minister Michael Groschek has warned could signal a “luxury ghettoisation” of the city.

The city’s mayor Dirk Elbers said that as land was in such high demand in Düsseldorf, it would not be being used for cheap housing, which suggested should be built further out in the lower Rhine area of the state instead.

“Booming towns like Cologne, Düsseldorf and Münster need additional social-housing and the funding is there, they just need to ask for it,” Groschek told paper.

In fact, Cologne was North Rhine-Westphalia frontrunner when it came to spending on low-income housing, spending €222 million in the past three years.

Subsidising accommodation was, the WAZ said, a tradition in NRW. The state government, which is currently a coalition between the Green Party and the Social Democrats, set aside €850 million this year alone for the cause, and generally commissions 5,000 to 6,000 new social rent apartments each year.

The problem is not just confined to the west of the country though, as Berlin lacks around 428,000 social houses – meaning just a third of low-income families have access to one, according to research from research centre the Pestel Institute.

“Each year around 12,500 social rent apartments disappear from the market,” said institute head Matthias Günther. He added that when social housing was bought up by private investors, an increase in rent almost always followed.

The gap in the market had been growing for years and needs to be closed, by putting priority on building more social housing, he said.

DAPD/The Local/jcw

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MONEY

Where in Germany do people have the highest disposable income?

An economic study has shown huge regional differences in income throughout Germany. So which parts of the country have the most to spend each month, and which are feeling the squeeze?

Where in Germany do people have the highest disposable income?

A study by the Economic and Social Sciences Institute (WSI) of the Hans-Böckler foundation reveals stark regional differences in disposable income in Germany. In some cases, households had as much as double the spending money of those in other parts of the country. 

Here’s where people have the most – and least – disposable income each month.

What is disposable income?

The WSI calculated disposable income as the sum of income from wealth and employment, minus social contributions, income taxes, property taxes and other direct benefits or taxes.

What’s left is the income which private households can either spend on consumer goods or save.

The study, which was based on the most recent available national accounts data for 2019, looked at the disposable income of all of the 401 counties, districts and cities across Germany.

Which regions have the highest and lowest disposable incomes?

The study found that the regions with the highest disposable incomes were in the southern states.

Heilbronn in Baden-Württemberg had the highest disposable income of all 401 German counties and independent cities – with an average per capita disposable income of €42,275. The district of Starnberg in Bayern followed in second place with €38,509.

READ ALSO: REVEALED: How much do employees really earn across Germany’s states?

By comparison, per capita incomes in the cities of Gelsenkirchen and Duisburg in North Rhine-Westphalia were less than half as high, at €17,015 and €17,741 respectively. These regions had the lowest disposable income in the country. 

The study also found that, more than thirty years since German reunification, the eastern regions continue to lag behind those in the west in terms of wages.

According to the WSI, the Potsdam-Mittelmark district is the only district in the former east where the disposable per capita income of €24,127 exceeds the national average of €23,706.

Do regional price differences balance things out?

The study also showed that regionally different price levels contribute to a certain levelling out of disposable incomes, as regions with high incomes also tend to have higher rents and other living costs.

“People then have more money in their wallets, but they cannot afford more to the same extent,” WSI scientist Toralf Pusch explained.

READ ALSO: EXPLAINED: When will Germany raise the minimum wage?

Therefore, incomes in the eastern states, adjusted for purchasing power, are generally somewhat higher than the per capita amounts would suggest.

That could explain why, even after price adjustment, the cities of Gelsenkirchen and Duisburg in western Germany continue to be at the very bottom of the list.

Saxon-Anhalt’s Halle an der Saale, on the other hand, which has an average disposable income of only €18,527, benefits from the lower prices in the east.

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