Rental prices in German cities are rising while purchase prices are falling - financial experts analyze the development.

Rental prices in German cities are rising while purchase prices are falling - financial experts analyze the development.

According to a report by www.n-tv.de, rents in German cities are rising sharply. The analysis by real estate specialist Jones Lang LaSalle (JLL) shows that in the second half of 2023, asking rents in Berlin, Hamburg, Munich, Cologne, Frankfurt, Düsseldorf, Stuttgart and Leipzig rose by an average of 8.2 percent compared to the previous year. The increase in rents was particularly massive in Berlin and Leipzig, with demand increasing and supply becoming scarcer.

According to experts, there are no signs of an end to the increase. New construction is in crisis due to increased interest rates and material prices, and the federal government is far from its goal of building 400,000 new apartments annually.

On the other hand, the asking prices for new buildings and existing apartments in the metropolises fell by an average of 7.4 percent in the second half of the year compared to the previous year, which indicates that the price expectations of buyers and sellers are far apart.

The impact of these developments can be significant. The sharp rise in rents combined with the decline in property prices could lead to increased excess demand in the rental housing market. This could widen the gap between existing and new contract rents and further exacerbate the tense situation on the housing markets.

It remains to be seen how these developments will impact the market and financial sector in the long term, but current data points to ongoing challenges in the German housing market.