
German rental market: Where it is most expensive and cheapest
Unfortunately, Germany's most expensive city, Munich, is not one of them. With prices already barely affordable, experts found it hard to believe that growth could accelerate. But that is exactly what has happened. The situation is different in Berlin, where the growth rate is roughly the same as last year. However, this also means rapidly rising rents. The reason for this is the shortage of housing. The capital's population continues to grow every year. However, Berlin remains comparatively inexpensive in a European capital comparison and also in comparison with other German cities. Berlin is still not in the top ten most expensive cities and regions in Germany. Munich continues to top this list. In addition to large metropolitan areas, popular vacation islands are also well represented here. When it comes to new buildings with average residential value, Sylt is the front-runner.
However, there are also cities where prices are stagnating. This means that the growth rate here is 0 percent. These include Cologne, Frankfurt am Main, and Düsseldorf. Rents here are already very high and seem to have peaked. We can therefore look forward to seeing how things develop over the next few years. This year, the city state of Bremen has already proven that a drop in rental prices in large cities is also possible. In 2018, Bremen residents are paying around 5 percent less rent than in 2017.
In many small towns with up to 50,000 inhabitants, however, rising rents can be observed. "After prices in small towns stagnated or rose only slightly last year, significant catch-up effects can now be observed," explained IVD President Schick at the presentation of the housing price index.
On average, people in Germany pay just over 9 euros per square meter. The federal state of Rhineland-Palatinate, among others, has much lower rents. The biggest bargains can be found in Dierdorf in the Palatinate. Here, you pay only 3.50 euros per square meter for an existing apartment with average living standards.
But why are rents rising overall? Inflation alone cannot explain this, as the IVD study shows. This becomes clear when you compare the development of rents with the consumer price index of the Federal Statistical Office. Since 2010 at the latest, rent prices have been rising much faster than general inflation.
The IVD president sees the reasons for this in the sluggish pace of housing construction. "Housing construction in Germany is still not keeping pace with demand. More apartments would ease the pressure on the markets and provide effective protection against sharp rent increases," explained Schick.
Would you like to know whether renting out your property is worthwhile? We are well informed about rental and purchase prices in the region and would be happy to advise you on your options.