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How real estate in Germany has rocketed in the pandemic

Many industries have suffered in the pandemic, but Germany's real estate market is thriving, a new report shows.

Published: 17 February 2022 17:21 CET
Apartments in Hamburg's Eimsbüttel area.
Apartments in Hamburg's Eimsbüttel area. Photo: picture alliance/dpa | Marcus Brandt

While restaurant owners, retailers and cultural organisers have been feeling the burden of the pandemic in Germany, at least one sector of the economy has come through relatively unscathed: residential real estate.

The price dampener feared at the beginning of the pandemic did not materialise last year, in fact, quite the opposite happened: purchase prices increased at an above-average rate.

Since a low point in 2009, homes have more than doubled in cost. A report by the Council of Real Estate Experts (Immobilienweisen) presented earlier this week puts the price increase since then at 146 percent, reported German newspaper FAZ on Tuesday.

READ ALSO: The German cities where property prices are soaring

What did the report find?

In 2021, condominiums rose in price by an average of 14.3 percent nationwide, to €3,140 per square metre, according to the report. Compared to the previous year, the price increase has intensified: from 2020 to 2021, the increase was 11.2 percent.

Prices for homes in eastern Germany have recently risen more strongly than in the west. Large cities in the east – excluding Berlin – recorded an increase of 19.6 percent last year to a price per square metre of €2,621. In western cities prices rose by only 12.5 percent, although the level is also significantly higher at €4,096.

READ ALSO: Why Frankfurt could have the biggest housing bubble in the world

What about rents?

Rents also rose, but not at the same rate as real estate. According to the real estate experts group, they went up by 3.7 percent to an average of €8.46 per square metre. The authors of the survey observed the strongest increase (4.1 per cent) in asking rents in western German districts to €8.27.

In the so-called ‘A-cities’ – Berlin, Düsseldorf, Frankfurt, Cologne, Hamburg, Munich and Stuttgart – new leases rose by 2.7 per cent to an average of €12.27 per square metre.

Berlin continues to be an outlier, with asking rents rising by 4.7 per cent to €9.70 on average. The absolute front-runner is still Munich, with rents averaging a shocking €16.99 (plus 2.6 percent).

READ ALSO: Why rent prices in major German cities are starting to fall

The number of new-build flats in Germany is rising, but it’s not near the current targets.

Flats in Cologne.

Flats in Cologne. Photo: picture alliance/dpa | Federico Gambarini

After around 306,000 flats completed in 2020, the real estate report estimates the number of new-builds for 2021 to be 315,000.

Germany’s government has pledged to increase the annual number of new builds to 400,000 per year, but experts say that will be difficult to reach.

Housing is a major social problem in Germany, especially in cities. 

According to a study from last year, around 4.1 million households in Germany’s big cities have to fork out more than 30 percent of their net income on rent, including utilities and heating.

Among social scientists and real estate experts, a rent burden ratio above 30 percent of household income is considered problematic, especially for households with lower incomes.

Many landlords don’t allow people to rent a flat if they reach this threshold because they doubt that tenants can afford their flats long-term under these circumstances.

The study released in 2021 and funded by the Hans Böckler Foundation, also found that around 2.2 million households in the 77 major German cities have to spend at least 40 percent of their income on rent, and for just under 12 per cent – or almost one million households – more than half of their take-home pay goes on rental costs. 

On average, tenant households in large cities pay 29.8 percent of their income for gross ‘warm’ rent (rent including associated costs like electricity and gas).

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PROPERTY

Why it’s hard to find an apartment with air conditioning in Germany

When temperatures start to get up to 30C or more in Germany, a familiar debate begins. It often starts with a simple question, asked by a new arrival to the country: “Why don’t German homes have air conditioning?”

Published: 25 June 2024 16:58 CEST
Why it's hard to find an apartment with air conditioning in Germany

The tendency to avoid air conditioning (A/C) is not uniquely a German trend. Europeans tend to use A/C less than residents in the US, and some countries in Asia.

But as temperatures have crept slowly upwards due to climate change, and the number of hot days has increased, Europe has seen an increase in demand for air conditioning. Across the continent A/C use has more than doubled since 1990.

But A/C is used much more commonly in countries that see higher temperatures like Spain, Italy or France, whereas it is still uncommon in homes in Germany.

So why does Germany tend to lack air conditioning, and why aren’t more Germans interested in installing it?

It’s not a ‘hot’ country

Ask a German why air conditioning is so rare in the country, and you’ll probably hear some version of “Well Germany is not such a hot country.” Which may be true generally, but is a less than convincing explanation if you hear it on a sunny summer day when it’s 35C outside.

But it is worth keeping in mind that while Germany does have warm summers, often with at least a couple heat waves, super hot days are few compared to warmer countries, like those in southern Europe. 

Given Germany’s weather can really only be described as hot for a few weeks out of each year, and considering the costs of installing and running air conditioning, most Germans figure it’s not worth it.

attic with sliding window

A sliding attic window is designed to help tenants cool off, but it won’t help to open windows during the hottest part of the day. Photo: pa/obs LiDEKO | LiDEKO

This isn’t only reserved for homes, but extends to plenty of public spaces including office and government buildings, and to some public transportation as well. 

In fact, schools and workplaces do occasionally call it quits during hot weather spells in an event called hitzefrei.

READ ALSO: Ditching AC for ‘Hitzefrei’ – Taking on the German summer as a Californian

Air conditioning is energy intensive and expensive

The other side of the argument against air conditioning is that both installation and operating costs can be expensive. Air conditioning tends to be energy inefficient, so using it can significantly increase your utility bill.

From an environmental point of view, all the energy used for air conditioning, if Germany was to start installing A/C at scale, would add to the country’s energy demand and greenhouse gas emissions – both of which Germany is already struggling to cut down year after year as part of its climate goals.

It is an ironic feature of traditional air conditioning that it creates a negative feedback loop: More people rely on air conditioning to stay cool as weather warms, but weather continues warming in part due to emissions from air conditioning.

That said there are cases where access to air conditioning can save lives. In particular elderly people and those with health-risks are prone to heat sensitivity. So while it’s probably good that not every house in Germany has A/C, it’s important that hospitals and some other buildings in a given city do.

READ ALSO: How German cities are adapting to rising temperatures

‘Cold air makes you sick’

Along with the reasonable (if debatable) reasons for the lack of A/C in Germany, there are also cultural factors.

On the social media website Reddit, a user posted the question, “Will more places in Germany start using air conditioning?”

One of the top comments read, “Don’t you know cold air makes you sick….says Oma (the German word for grandma). 

While that comment comes off a bit tongue in cheek, it touches on a real and deeply-ingrained belief that persists among parts of the German population: That exposure to cold, or even maybe a cool breeze, is bad for your health. This includes a draft in your house, called a Durchzug in German.

For this reason, the German Red Cross felt compelled to debunk the Durchzug health myth in a hot weather warning they issued in 2019.

a heat pump is installed

An employee inspects a heat pump in front of a newly built residential building. Heat pumps are also effective for cooling. Photo: picture alliance/dpa | Bernd Weißbrod

What can you do about the heat?

Regardless of where you stand on the air conditioning debate, if you don’t have a personal A/C unit at home presently, the best way to endure the hottest days of summer may be to take a few tips from the locals.

During my first summer in Germany, I took to leaving the windows open throughout the day, thinking that the occasional warm breeze was the best relief I could hope for at home. But one day my landlord came by and asked me why I was suffering in the heat with the windows open.

He recommended that I instead leave the windows open at night or in the early morning to get some fresh cool air inside, and then keep all the windows closed through the heat of the day. I tried this strategy the next day, and immediately felt that he was right.

Compared to homes in the US, for instance, German homes tend to be very well insulated. This can be equally important in the summer as it means that the interior tends to stay cooler than the outside (as long as you keep it mostly sealed off).

On extremely hot days, you might even keep your shutters down to shade the windows and prevent the sun from shining through.

Of course the effectiveness of the strategy depends on having a home that’s well insulated, including double paned windows and well-sealed doors etc. If you feel that the inside of your house is getting as warm or warmer than the outside, then it’s probably time to open up the windows or go outside and sit in the shade.

Fans are also useful. Best is a ceiling fan designed to rotate counter-clockwise to push air downward, which can maximise wind chill within a home, but floor fans can also help.

Ironically, in the longer term it may actually be heat pumps that help Germany to modernise its cooling infrastructure. 

Heat pumps maximise the efficiency of heating systems by moving warm air around a building, and they can also work with cooling systems. Many heat pump systems on the market today are already built to support both heating and cooling functions, and they are much more energy efficient than classic air condition systems.

READ ALSO: Who can apply for Germany’s new heat pump grants for homes?

Unfortunately for tenants with no heat pump and no A/C, the best you can do for now is take notes of cool places in your city where you can relax in the shade or in the water during the hottest hours or the hottest days.

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