Bad news: Why rents in Germany will continue to rise in 2020
It’s bad news for tenants across Germany as experts predict the cost of renting will continue to climb next year – and not only in big cities.
According to the German Tenants' Association, rents will probably only go one way next year and that's up.
"I don't yet see a trend reversal," association chief Lukas Siebenkotten said. In 2020, local comparative rents in Germany could increase by an average of 2.5 to 3.5 percent, he said.
"There may be a slowdown in some cities, but as long as there are people who pay the increasing rents, they will continue to rise."
Siebenkotten said intervention from politicians was needed – similar to what's happened in Berlin where the local government has opted to introduce a rent freeze for five years.
Recently, we told how a massive 1,749 flat-hunters queued outside to visit a vacant Berlin apartment 12 hours after it was advertised online, a sign of the city's problematic housing situation.
"It would be helpful if the federal government would legally limit the increase in rents to the inflation rate over five years," said Siebenkotten.
How can Germany tackle housing crisis?
However, experts say it's not just about rental caps – there also needs to be more affordable housing available.
"The federal, state and local governments must spend significantly more money on affordable housing in order to build at least 100,000 subsidized apartments annually," Stefan Körzell, board member of the German Federation of Trade Unions, said.
The grand coalition missed its target of providing 375,000 new housing units per year: only around 287,000 were built in 2018.
At the same time, more and more people are moving to Germany – above all to Leipzig, Frankfurt and Berlin, the Federal Statistical Office said recently. This is driving rents up, while in remote regions there are lots of empty flats.
According to the Hamburg Gewos Institute for Urban, Regional and Housing Research, the rise in rents continued in the third quarter, albeit at a slower pace. New contract rents across Germany increased on average to €7.29 per square metre (cold - without added costs) – 3.7 percent more than in the same period last year.
The cost of renting grew particularly strongly in the seven largest cities Berlin, Hamburg, Munich, Cologne, Frankfurt, Stuttgart and Düsseldorf. Rents increased by around 5.2 per cent to €12,42 (cold) per square meter.
New contract rents represent only one part of the real estate market but they help to give a snapshot of what's going on. Rents in existing properties are usually lower.
Is it really getting worse?
Experts said recently said the prices for renting in some places were beginning to stabilize. Real estate specialist Empirica had said there signs of stagnation in cities such as Munich and Hamburg.
In some of the most expensive cities in Germany, new contract rents even fell in the third quarter, according to the real estate specialist F+B. Rent prices declined by 0.5 percent in Karlsruhe and 2.5 percent in Esslingen.
According to the most recent rent index data for 2019, rents in existing properties rose by 1.8 percent, compared with 2.2 percent in the previous year, F+B Managing Director Bernd Leutner said.
However, there's been an increase in rents in the surrounding areas of cities, as The Local reported earlier this month.
"There's an enormous amount of pressure spilling over," said Gewos Managing Director Carolin Wandzik.
"It's not only metropolises, but also cities with 50,000 or 100,000 inhabitants that attract skilled workers and become regional centres with increasing housing shortages."
Wandzik does not expect rents to fall next year either.
"With the strong labour market, many skilled workers are moving to the cities and with a stable economy, Germany is in a good position by European standards," she said.
German Tenants' Association - Deutscher Mieterbund
Rents - (die) Mieten
New building/construction - (der) Neubau
Social housing - (die) Sozialwohnungen
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