Aachen is one of the cities where rents are rising faster than the current inflation rate.
German residential rents have been rising at up to 9% over the past year, in many places outstripping the rate of inflation, according to a new report by property portal Immowelt.
In comparing asking rents for houses and apartment across Germany between July 2022 and July 2023, the Immowelt researchers found that rents have risen in the period in 69 out of the country’s 80 biggest cities. The survey was based on the asking rent for a typical apartment of 80 sqm, with three rooms, on the second floor (not including utilities) listed on the Immowelt website - and then compared to the figures from a year earlier.
Munich - notoriously the country’s most expensive city - showed prices continuing to rise, with average asking rents rising by 5.2% percent over the last 12 months, to €17,55 per sqm. In Hamburg and Berlin, asking rents rose by 3.9%, in Stuttgart by 2.0%, Frankfurt 2.4% and Cologne 2.7%
Notable is that prices are seeing their highest rises in smaller cities and suburbs of the biggest cities, as people spread away from the expensive centres in search of better value. Among the biggest rises was in Siegen, which saw rents rising by 9% over the year. In 10 of the 80 cities included in the study - Aachen, Bottrop, Hamm, Heilbronn, Jena, Monchengladbach, Mülheim an der Ruhr, Oldenburg, Remscheid and Siegen - rents are rising even faster than the current inflation rate of 6.4 percent.
Felix Kusch, managing director, immowelt
Immowelt’s managing director Felix Kusch said the trend was becoming firmly established, with no turnaround in sight. “The record influx to Germany and the slump in residential construction are putting additional pressure on the already strained rental markets. It is particularly alarming to look at the number of building completions, which are reaching a new low every month.”
Last year, net migration into Germany reached a record 1.5 million people. The government has pledged to build 400.000 new apartments per year, but there’s currently no chance of that. Rising costs are likely to see barely 200,000 apartments being completed this year (see elsewhere in this issue).
Among the cities with the lowest rents are, not surprisingly, many in eastern Germany. However, several major industrial projects due to put down roots in the region could soon change that. Thousands of new jobs are expected to be created with the arrival of Intel and its major chip manufacturing plant in Magdeburg, along with Taiwanese chipmaker TSMC with a new plant in Dresden. Both projects are being financed with hefty subsidies from the government in Berlin - with €10bn in the case of Intel.
Within the region, the most favourable rents are to be found in Chemnitz, with rents averaging €5.46 per sqm. Rents there are only rising at 1.5% because of prevailing high vacancy rates, but this could change rapidly with further announcement of foreign direct investment in a region which is developing ‘cluster’ characteristics.
