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Bargain ‘B-cities’: The places to buy property in Germany if you’re on a tight budget

Housing is becoming more expensive to buy - and rent - in Germany. But according to a new study, buyers can still make good investments.

Bargain 'B-cities': The places to buy property in Germany if you're on a tight budget
Lüneburg's picturesque Altstadt. A good place to buy a home? Photo: DPA

The cost of houses and apartments is continuing to rise in Germany.

But a study by the real estate service provider Dr. Lübcke & Kelber has found the so-called “hidden champions” – where buying a house is a sound investment – in Germany, published by Spiegel,

READ ALSO: What you need to know about Berlin's turbulent housing market

The “Risk-Return Ranking 2019”  found prices of apartments climbed last year by an average of 9.4 percent, and for new builds by 6.8 percent.

Growth was particularly rapid in major cities such as Berlin, Hamburg and Munich. An average apartment in Munich costs €7,436 per square metre, and for new builds it’s around €8,836.

This is the average cost of apartments in the 10 most expensive cities in Germany per square metre:

Munich: €7,436

Frankfurt am Main: €5,148

Konstanz: €4,763

Hamburg: €4,520

Stuttgart: €4,356

Berlin: €4,274

Freiburg: €4,209

Regensburg: €4,113

Rosenheim: €4,109

Ingolstadt: €4,019

Homes in Stuttgart, or Germany's fifth most expensive city per square metre. Photo: DPA

This is the average cost of apartments in the most cheapest cities in Germany per square metre:

Herne: €1,204

Duisburg: €1,203

Hagen: €1,200

Wilhelmshaven: €1,182

Bremerhaven: €1,130

Gelsenkirchen: €1,042

Saltzgitter: €1,033

Chemnitz: €1,018

Dessau-Roßlau: €885

Gera: €777

Munich is also the most expensive city in Germany when it comes to rents. In the Bavarian state capital, the €20 per square metre limit was even exceeded for the first time for new apartments. 

An average apartment of this kind now costs on average €20.34 per square metre. 

“At present, there is virtually no vacancy in Munich, and demand for housing can be satisfied almost exclusively by new construction,” the study says. The situation is similar in Frankfurt and Münster. 

READ ALSO: The places in Germany where rents are rising rapidly

So where should prospective buyers think about buying a home?

Real estate experts say honing in on “B-cities” is a better option. In these places, prices have not risen so dramatically, so residents have a better chance of gaining better returns if they are renting the property out or selling it in future. 

The study is primarily aimed at real estate investors who want to buy and rent apartments. But the data is also interesting for people who are looking for a property for their own use.

Lüneburg on top

So what's the result? In cities such as Munich, Frankfurt or Stuttgart, the risks of a real estate investment are very low. However, the yields that can be achieved there are now much lower because prices have risen so sharply.

By contrast, cities such as Lüneburg in Lower Saxony, Fürth in Bavaria, and Pforzheim in Baden-Württemberg are the “hidden champions” in the ranking of existing buildings.

They offer the best opportunities because the balance between risk and return still works in favour of the buyer.

These cities have become “increasingly attractive lately,” says the study. 

Other places where prospective buyers should keep their eyes on is Bamberg in Bavaria, Wolfsburg in Lower Saxony and Flensburg in Schleswig-Holstein. 

Cities such as Potsdam or Darmstadt often have a similarly low risk like their larger neighbouring cities of Berlin and Frankfurt, but at the same time offer higher potential and better return prospects. 

“In addition, there is often a higher quality of life in the surrounding area compared to the city,” said the analysts. Young families in particular are increasingly migrating to the surrounding area. 

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‘Housing is a human right’: Rent activists step up pressure ahead of German elections

Housing campaigners from across Germany have banded together ahead of the September elections to demand an immediate rent freeze and affordable housing for all.

'Housing is a human right': Rent activists step up pressure ahead of German elections
People protesting for Deutsche Wohnen & Co. enteignen at a demo in Berlin on August 21st. Photo: picture alliance/dpa | Christoph Soede

In a demonstration taking place in the German capital on September 11th, 2021, numerous campaign groups will take to the streets, among them the Berlin-based Expropriate Deutsche Wohnen & Co. campaign, the national Rent Freeze campaign and the Mannheim-based Action Alliance Against Desperation and Rent Madness. 

They are demanding a national rent freeze for the next six years to halt rising rents, along with a focus on building more affordable homes and the transfer of property from private landlords into state hands.

“With this rents demonstration, we’re protesting against the massive, persistent pressure that renters are facing in the whole of Germany,” campaigners said in a statement announcing the upcoming protest.

“Whether it’s Frankfurt, Dresden, Munich, Leipzig, Berlin, Hamburg or Cologne, rents are incessantly rising or have already reached unreasonable levels – und not just in the big cities.

“In many places, the availability of affordable living space has sunk dramatically for those entering a new housing contract. Homelessness is rising further and with it, the number of people who live on the streets without any shelter at all.” 

Sharp rise in rents

Of all the cities in Germany, Berlin has by far the fastest rising rents: a recent study by housing portal Immowelt found that asking rents in the capital have soared by more than 40 percent over the past five years alone.

READ ALSO: COMPARE: The cities in Germany with the fastest-rising rents

However, the same study also found that middle-sized German cities like Heidelberg and Kaiserslautern were experiencing significant rent hikes over the same period, while the country’s priciest cities like Munich and Stuttgart continued to see rents go up – though not quite as steeply as in previous years.

Not just Berlin: Medium-sized cities such as Heidelberg have seen steep rises in rents over the past half a decade. Photo: picture alliance/dpa | Uwe Anspach

As Germany prepares to head to the polls on September 26th in both the federal and a number of state elections, the campaign is aiming to step up pressure on the next government to embark on a “radical change of course” in the country’s housing policy. 

READ ALSO: Election 2021: How do Germany’s political parties want to tackle rising rents?

In Berlin, people with German citizenship will also be given a vote in a referendum on whether the state government should buy out thousands of flats owned by for-profit landlords with 3,000 or more properties – including Vonovia and Deutsche Wohnen – in order to better control rents and living standards.

“On September 26th, Berliners have a unique, historical chance to stand up against the selling off of our cities,” Rouzbeh Tehari, spokesman for the Expropriate Deutsche Wohnen & Co. campaign, told The Local.

“The referendum to nationalise large property firms offers the opportunity to remove hundreds of thousands of apartments from capitalist speculation and manage them as social housing.”

READ ALSO: Berlin to vote on radical bid to combat housing crisis

Even if the referendum passes, however, the campaign expects to face a fierce battle with the newly elected Berlin Senate to see the policy put into law. 

“We won’t stop after the vote,” Tehari explained. “We know we’re facing strong opposition and it will be difficult to get it implemented.” 

A ‘yes’ poster for the referendum being put up in Berlin. Photo: picture alliance/dpa | Christophe Gateau

Either way, the success of the campaign – which managed to collect well over the 170,000 petition signatures needed to call a referendum – will have sent a strong message to the venture capitalists that speculating on Berlin housing is a “high risk” strategy, he said.  

A national rent cap?

The national Rent Freeze campaign, one of the key activist groups involved in Saturday’s demo, is calling for a new six-year rental cap – but says it must be done on a national level.

Earlier this year, attempts to impose a six-year rent freeze in Munich and Berlin were both rejected by Germany’s Constitutional Court on the basis that such as move couldn’t be done on a state or regional level.

In the case of Berlin, the rent cap had been in place since 2018, but was removed after the court found the law to be unconstitutional.

A tweet from the ‘Prevent Forced Evictions’ campaign ahead of the demo on Saturday reads: “According to a new study, a national rent cap is possible. The only thing missing is the political will.” 

At the time, renters were dealt a double blow as the court ruled that landlords also had the right to reclaim back-dated rent for the entire duration of the cap – leading some tenants to be presented with bills amounting to thousands of euros. 


But the national Rent Freeze campaign, which started in Bavaria, has now amassed support from around 140 other organisations and activist groups, and is gaining momentum ahead of the elections.

“Many tenants are desperate,” said Matthias Weinzierl of the Rent Freeze campaign. “They’re legitimately afraid of losing their homes because rents continue to rise and Covid-19 hasn’t changed a thing. 

“That’s why we’re calling for a national six-year rent freeze now, which must be brought in directly after the new government has been elected. Such a rent freeze would be an acute help for tenants – and it’s also urgently needed.” 

‘Existential threat’

The date of the demo is the national Day of the Homeless, and was selected to highlight what campaigners see as the real threat of the housing crisis.

“In many places, high rents are becoming a genuine poverty risk and loss of housing is becoming an existential threat,” said Ulrich Schneider, CEO of the Parity Welfare Association, which is also supporting the demo.

People sleeping rough in Berlin in February 2021. Campaigners believe the housing crisis and homelessness are closely linked. Photo: picture alliance/dpa | Kay Nietfeld

“It’s completely unreasonable to force single parents, people with disabilities or those in need of care, for example, to give up their homes and lose their entire social environment.” 

The protest on Saturday has also received support from the National Working Group for Help for the Homeless (BAGWH), who have linked unaffordable rents to a rise in the number of employed people losing their homes. 

In one recent study, BAGWH found that 15 percent of people classified as ‘homeless’ are currently employed – suggesting that rents in Germany are now outstripping wages, especially for lower earners.

Commenting on the findings, Werena Rosenke, CEO of BAGWH, said that the figures were “proof of the precarious living conditions in which many people find themselves in this country and the trends that are emerging in our society”. 

Any new government elected after September 26th must face this issue head on, she added.