Accelerated rise in rents in major German cities

2023-07-29 06:04:00

High demand for living space, faltering new construction, hesitant real estate buyers: According to a study, the pressure on the real estate market in German cities has increased. Asking rents in Berlin, Hamburg, Munich, Cologne, Frankfurt, Dusseldorf, Stuttgart and Leipzig climbed an average of 6.7 percent in the first half of the year. That shows an analysis published this week by real estate specialist Jones Lang LaSalle (JLL).

In the same period last year, the increase in rents was 3.7 percent, according to the report. The momentum in the metropolises has recently been stronger than in urban districts: there, asking rents for new buildings and existing apartments have risen by 2.7 percent within twelve months. Advertised rents in the German counties climbed by 4.9 percent.

Asking rents do not yet mean a deal, sometimes the agreed rent deviates from this – but this is less common than when buying a property.

According to JLL, growth in the double-digit percentage range was recorded in Berlin and Leipzig. In Germany’s capital there was a net immigration of 86,000 people in 2022, while only a good 17,000 apartments were completed. Rent increases were much more moderate in the other major cities. “In all of the metropolises considered, there is an enormous shortage of supply, which will be exacerbated by the faltering housing construction,” said JLL residential real estate expert Roman Heidrich. “There is therefore no end in sight to the rent increases.” Pressure also comes from increased interest rates on loans, which are preventing prospective buyers from buying real estate and pushing them into the rental market, it said.

15.38 euros per square meter

The study also shows how expensive housing is in the eight major cities. There, rental apartments were offered at an average of 15.38 euros per square meter, around 50 percent more expensive than in urban districts (10 euros) and 79 percent more expensive than in the rural districts (8.61 euros).