Housing in Germany: Here’s where rent prices are going up (and down)

The coronavirus crisis is causing major economic problems, and resulting in a loss of wages for many people. Yet rents are continuing to go up for new tenants in many German cities, according to a study by real estate firm Immowelt.

However, there's been a decline in the capital Berlin.

According to the analysis, rents are increasing in 57 of 81 German cities with more than 100,000 residents.

The company compared the current market rents of apartments (40 to 120 square metres, built in 2016 or older) in the last four months of 2019 with the first four months of 2020.

Here's what they found:

• From the end of 2019 to the beginning of 2020 rents rose by up to 12 percent –  a total of 57 German cities had rising prices
• Frankfurt, Düsseldorf, Hamburg and Munich are large cities with rising rents
• The exception is Berlin where market rents have fallen – likely due to the rent freeze
• Some smaller cities had the largest increases

READ ALSO: Why rents in Germany will continue to rise in 2020

Housing is getting more expensive

It's not just smaller cities with low rents which have so far been affected by the increases, the study reports. Even in the most expensive large cities and metropolitan areas, housing is becoming ever-more pricier. 

Munich shows an increase of four percent. The median rent for new apartments on the market in the Bavarian capital now costs €17.30 per square meter – more than in any other major city. 

Even the high-priced financial metropolis of Frankfurt is well behind with €13.60. Rents there have, however, risen by five percent in recent months. Similar increases were also recorded in Hamburg (+4 percent) and Düsseldorf (+5 percent).

Stuttgart, another notoriously high-priced city for renting in Germany, has seen a rise of three percent, from €12.40 per square meters to €12.80.

"The demand and supply for rental apartments gape widely apart in most major German cities, said Professor Dr Cai-Nicolas Ziegler, CEO of Immowelt AG. "Even the corona crisis has not changed this.

"The number of enquiries is already back to the level it was at before the crisis. Residential construction, on the other hand, has come to a partial halt. In tight markets, we therefore continue to expect rents to rise slightly."

READ ALSO: Rising rent prices in Germany: What are the affordable options for families?

Why Berlin is the exception

One of the few cities with falling rents is Berlin. From on average €10.70 per square metre at the end of 2019 to the current €10.20, market rents have fallen by five percent. 

The rent freeze, which has been in force since the end of February, has played a major role in the decline.

READ ALSO: Berlin passes five year rent freeze law

It means rents for existing properties (built before 2014) are frozen for five years. At the same time, rent caps apply, the amount of which depends on the year of construction, location and equipment. The benchmark for this is the price level of the current Berlin rent index.

READ ALSO: Nearly 1,800 people turn up for single flat viewing in Berlin

Other cities where the rent has reportedly gone down are Ingolstadt (–2 percent) from €11.30 per square metre to €11.10 and Wiesbaden and Münster (both –3 percent).

In 70 percent of the cities surveyed, however, the price curve continues to point upwards.

The largest increases are recorded by the smaller cities. Reutlingen leads the way with a 12 percent increase between the end of 2019 and the beginning of 2020, while Mainz (+10 percent) also shows double-digit growth.

In both cities, an apartment rents at more than €10 on average. Although this limit has not yet been topped in Moers (+9 percent) and Wolfsburg (+7 percent), new tenants there must also be prepared for higher prices.