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RENTING

EXPLAINED: How rents are changing in Germany’s five biggest cities

Rents in Germany have been on the rise recently, but there are significant differences between the country's five most populous cities: Berlin, Hamburg, Munich, Cologne and Frankfurt am Main.

New apartment buildings in the district of Freiham in Munich.
New apartment buildings in the district of Freiham in Munich. Photo: picture alliance/dpa | Carsten Hoefer

Berlin

Rents in the capital have shot up recently.

At the beginning of March, real estate portal Immowelt published a report which showed that, between November 2022 and February 2023, the average rental price per square metre in Berlin rose from €9.86 to €12.55 – an increase of 27 percent.

Prior to this spike in rental prices, Berlin was in the middle of the ranking for rents in German cities with more than 500,000 inhabitants. Now, it’s the second most expensive city in Germany to rent in.

READ ALSO: Berlin rental prices rose by ‘almost a third’ in three months

According to the most recent report on Berlin’s real estate market by realtors Engel & Völkers, there are currently 137,000 apartments too few in Berlin, which is contributing to the increased prices.

Over the last ten years, rents in the capital have increased by approximately 60 percent.

A recent report by real estate portal Immoscout24 also found that, in 2022, rents for new build apartments in Berlin averaged around €17.19 per square meter – an increase of 0.6 percent compared to 2021.

According to the report, the most expensive district in 2022 was Mitte, where the average rent was €15.47 per square metre, followed by Charlottenburg-Wilmesdorf (€15.00) and Friedrichschain-Kreuzberg (€14.85).

Hamburg

Rents in Germany’s second-biggest city by population, have also been moving upwards, though not quite as steeply as in Berlin. In the three months from November 2022 to February this year, the average rental price in the city sunk by one percent from €11.53 per square metre to €11.46.

The longer-term picture, however, shows a steady rise in rents.

According to the Immoscout24 study, over the past five years, landlords in Hamburg have increased basic rents by an average of 18 percent.

View of new apartment buildings in Hafencity, Hamburg.

View of new apartment buildings in Hafencity, Hamburg. Photo: picture alliance/dpa | Marcus Brandt

In 2022, rents for existing buildings rose by 11.9 percent and for new buildings by 8.5 percent. The price per square meter is currently €12.86 for existing buildings and €14.98 in new ones. Broken down by neighbourhood, there are smaller differences than in Berlin.

The two cheapest districts in Hamburg are Bergedorf and Harburg, where the price per square metre for existing apartments costs €11.59 and €11.70 respectively. For new build apartments, the cost in these districts is €14.35 and €14.30 respectively.

READ ALSO: OPINION: Germany’s ruthless housing market is tough on new tenants – but there are winners

In the city’s most sought-after locations – HafenCity, Harvestehude, Uhlenhorst and Rotherbaum –  there are no rental units to be found for under €19 per square metre.

Munich

With a current average rental price of €17.39 per square metre, Munich is by far the most expensive city in Germany to rent in.

Though in the three months between November 2022 and February this year, rents rose by only 4 percent, last year, rents rose by an average of 9.2 percent for existing apartments and 12.8 percent for new builds. In 2022, tenants paid around €17.77 per square metre for existing apartments and as much as €21.37 for new builds.

READ ALSO: Why Germany is seeing the ‘worst housing shortage in 20 years’

When broken down by district, some of the price increases for rents in Munich are enormous. In the Schwanthalerhöhe district, for example, rents for new build apartments rose by 24.1 percent in 2022. Twelve other neighbourhoods also saw an increase of at least 20 percent in the price per square metre of new build apartments last year.  

However, there are still some relatively reasonable rental prices available in Munich. In the districts of Aubing-Lochhausen-Langwied and Feldmoching-Hasenbergl, the price for existing apartments is less than €16 per square meter. For new-build apartments, the most affordable neighbourhoods are Milbertshofen-Am-Hart and also Aubing-Lochhausen-Langwied, where the price per square meter is under €18.

Cologne

Compared to the three largest cities in Germany, rents in Cologne have been increasing at a more steady pace. In 2022, rents rose by an average of 5.9 percent for existing apartments and 9.5 percent for new buildings: the current average price per square meter is €11.69 and €13.72 respectively.

Newly built apartments in the Ehrenfeld district of Cologne.

Newly built apartments in the Ehrenfeld district of Cologne. Photo: picture alliance/dpa | Rolf Vennenbernd

For existing apartments, rents have been falling for six months in every district, but most sharply in Kalk, where there has been a drop of 4 percent. Currently, the city’s cheapest districts are Chorweiler, Mülheim and Kalk, where rents per square metre are less than €11 per square metre in existing buildings, and below €14 for new constructions.

READ ALSO: Why rents for some properties are starting to fall in Germany

Meanwhile, the Ehrenfeld and Nippes districts saw the biggest price jumps for new buildings in 2022.

Frankfurt am Main

In Frankfurt, rents rose by a comparatively moderate 5.9 percent for existing apartments and 6.2 percent for new builds in 2022. The price per square metre is currently on average €13.16 for existing apartments and €15.66 for new buildings. In the Central-West district of the city, rents actually fell by 0.1 percent last year and the price increase in new constructions was also the lowest in this district.

The most affordable district for tenants is Bergen-Enkheim, with a price per square meter of €10.60 for existing buildings and €13.65 for new builds. The next cheapest districts are Harheim, East and West. The most expensive district in Frankfurt for tenants is the city centre, where the average basic rent (without utility costs) is €20.78.

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PROPERTY

Germany to subsidise landlords who offer affordable homes

Landlords who rent out properties for less than the market rate are set to get lucrative tax breaks in future, according to new plans to boost social housing in Germany.

Germany to subsidise landlords who offer affordable homes

As the government battles to keep rents affordable in Germany’s ongoing housing crisis, a scheme to boost social housing is set to be reintroduced. 

Echoing a previous initiative that was scrapped in the early 1990s, the non-profit housing law aims to subsidise companies that provide affordable living space on a long-term basis. 

“The non-profit housing scheme is back!,” Housing Minister Klara Geywitz (SPD) told the Stuttgarter Zeitung on Wednesday.

“I am delighted that this important project from the coalition agreement has been successfully implemented.”

According to the regional newspaper, the new instrument is part of the annual tax bill that is set to be voted on in cabinet in Wednesday.

READ ALSO: Can converting offices create housing in Germany?

If the law passes unamended, social enterprises, associations and charitable foundations would be able to provide subsidised housing and benefit from extensive tax breaks. 

To qualify for financial support, landlords must offer their properties permanently below the market rent and make these affordable properties available for people on lower incomes. 

The income limits have been set so that around 60 percent of households in Germany will be able to benefit from the new non-profit housing scheme, said Geywitz. The government expects at least 100 companies to take advantage of the subsidies and provide affordable living space for 105,000 tenants.

“In addition to social housing construction, we are creating another strong pillar for more affordable housing in our country with the public housing benefit,” Geywitz. “This is a good day for all tenants.”

Housing shortages

Tackling Germany’s housing crisis was one of the key manifesto pledges of the centre-left Social Democrats (SPD) when they became the largest party in government in 2021.

In the coalition pact of the SPD, Greens and Free Democrats (FDP), the parties promised to build 400,000 new homes a year, with 100,000 affordable homes among them. 

So far, however, the government has repeatedly failed to meet its targets, blaming sluggish construction rates on high building costs and a lack of skilled labour. 

READ ALSO: Why are Berlin rents soaring by 20 percent when there’s a rent brake?

In 2022, around 271,000 of the planned 400,000 new homes were built, with only 20,000 of these earmarked for social housing. 

According to research carried out by the Pestel Institute in Hannover, Germany currently needs around 800,000 additions homes to keep up with demand. 

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