Rents are exploding: Regional data shows dramatic developments

Rents are exploding: Regional data shows dramatic developments

The German housing market is faced with increasing challenges as the construction of new apartments is declining and there is a current shortage of around 600,000 to 700,000 apartments. Exclusive data from empirica shows that rents are literally exploding in some German regions. An analysis of cold rents for renovated apartments in the 60 to 80 square meter range from over 100 advertising sources shows that rents in every district have increased over the last ten years. What is particularly striking is the clear difference in rental price growth between the new and old federal states, with Brandenburg being an exception and positioning itself as the front runner in terms of relative rental price increases in regional states.

Rents in the capital Berlin have almost doubled, while the price per square meter in Saxony's Erzgebirgskreis is around 5.50 euros. Munich, on the other hand, leads the rankings with 19.40 euros per square meter and has recorded an increase of 6.50 euros per square meter within ten years. The price per square meter in Berlin rose twice as much as the national average. Furthermore, Munich, Cologne and Stuttgart have established themselves as more expensive rental markets than Hamburg, which indicates increased price increases in the cities mentioned.

New residential construction in Germany has almost come to a standstill, which is leading to persistently rising rents. Roman Heidrich, residential real estate expert at JLL, warns that the situation will not ease in the near future as there is a glaring shortage of newly built apartments. Despite empty apartments, rents are also rising in structurally weak regions, which is due to factors such as inflation and renovation work. Experts predict a bleak future for the housing market as rural and urban markets diverge.

In order to slow down the rapid rise in rents, measures are needed to make new housing construction more attractive. Heidrich emphasizes the need for government funding and suggests reducing the VAT for new rental residential buildings from 19 to seven percent. This measure could make new housing construction significantly cheaper and serve as an effective lever. Despite these proposals, the future of the housing market remains uncertain as financial and structural obstacles hinder rapid resolution of the problems.