SHARE
COPY LINK

HOUSING

Half of big city households in Germany ‘spend over 30 percent of income on rent’

While the rental burden on households has dropped overall over the past two decades, people living in the major cities are still spending a big chunk of their income on rents - with the poorest among the hardest hit.

Half of big city households in Germany 'spend over 30 percent of income on rent'
Newly constructed housing in Frankfurt. Photo: dpa | Sebastian Gollnow

Almost half of the roughly 8.4 million households with a rental apartment in a major German city spend more than 30 percent of their net income on rent, according to a new study funded by the trade union-affiliated Hans Böckler Foundation.

Roughly a quarter of households have to spend at least 40 percent of their income on their Warmmiete (rent including heating costs) and ancillary costs, the study found, while just under 12 percent of metropolitan households spent more than half of their income on rent.

The findings were based on an analysis of the 2018 micro census carried out by researchers from Humboldt University Berlin.

Their analysis also showed that the financial burden of rents on tenants has declined in recent years due to the fact that, even among residents of major cities, incomes have risen faster than housing costs.

Overall, tenants spent some 29.6 percent of their income on rent in 2018, down from 31.2 percent in 2001.

Increased construction activity has at best only slightly improved the housing shortage in recent years, the Böckler Foundation stressed, referring to the study.

There is a particular shortage of small and inexpensive apartments, the supply of which has dropped significantly in recent years, the foundation said.

The Federal Statistical Office (Destatis) has also concluded that rents now place slightly less burden on households overall in comparison with a few years ago.

According to its data, in 2019 just under 14 percent of the population (around 11.4 million people) lived in households that were financially overburdened by high housing costs. The overburden ratio has dropped somewhat since 2014.

READ MORE:

Destatis considers households to be overburdened if they spend more than 40 percent of their disposable income on housing costs – which includes both rents and mortgages. 

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.
For members

OPINION & ANALYSIS

OPINION: Sweden’s ‘historic investment’ has failed to solve the housing crisis

Five years after Sweden's government promised to solve the country's housing crisis with a "historic investment", things are as bad as ever, David Crouch argues. Radical action is needed.

OPINION: Sweden's 'historic investment' has failed to solve the housing crisis

Forced to move house 20 times in the past eight years, Maria’s situation was desperate. She and her daughter had arrived in Stockholm from Latin America in search of a better life. She found work, no problem – but housing was impossible.

“Sometimes I was paying 12,000kr in rent and it was very hard because I only had 15,000kr in monthly salary,” says Maria (not her real name). So she took a high-interest loan of 240,000kr and tried to bribe someone in the Housing Agency to get to the front of the queue for affordable housing.

But she was caught. Her fate is unknown. And she didn’t even get an apartment.

This recent story, in the excellent newspaper of the Tenants’ Association, sums up the problems facing people who move here to work. The market for rental accommodation is tight as a drum. Finding a home means competing with Swedes, but with all the disadvantages of being an outsider. So people find themselves pushed into short-term, insecure rental contracts at inflated prices.

It wasn’t supposed to be this way. Five years ago this month, the government announced a “historic investment in housing”, including subsidies for construction companies, easing restrictions on building permits, and making more land available.

The housing situation at the time was grim. Spotify had threatened to leave Sweden if things didn’t improve – how could the company attract skilled young people to a city where there was nowhere for them to live? More than half Stockholm’s population – 600,000 people – were in the queue for a coveted rental apartment, because strict regulation meant these rents were low. But it took as long as 20 years to get to the front of that queue.

The result was a thriving rental property black market, with large bribes changing hands. Many tenants exploited the situation by sub-letting their homes, or parts of them. “It is almost impossible for immigrants and new arrivals to penetrate this market – it is all about who you know and how much money you have,” said Billy McCormac, head of the Fastighetsägarna property association, in 2015.

READ ALSO: 

So what has been the outcome of the grand promises the government made five years ago? House-building at the time was already rising steadily, and it has continued to do so. Look around you in the big cities and you will see that new apartment blocks have sprung up here and there.

But we shouldn’t go only on appearances. To understand the reality, we need to look at some numbers.

The gap between demand for housing and the existing housing stock has indeed started to shrink. “As housing construction has gradually increased and population growth has begun to slow down, the gap has decreased since 2017,” Stockholm’s Housing Agency noted in December.

The Agency has broken records four years in a row for the number of rental homes it has provided. The proportion of young adults living independently has also increased somewhat, the Tenants’ Association found, probably due to the pace of construction.

But this smidgen of good news is outweighed by an avalanche of bad.

The average queuing time in 2021 for a Stockholm apartment was more than 9 years; for somewhere in the city centre you have to wait 18 years. Only 936 homes came with a waiting time of less than one year. More than three-quarters of a million people are now registered in the queue for housing – a big increase on five years ago.

The rate at which the housing shortage is shrinking is nowhere near fast enough to alleviate the huge accumulated demand.

Assuming that the current pace of construction can be maintained, it will be the end of this decade before any significant dent is made in the deficit of homes, according to Boverket – the Swedish National Board of Housing, Building and Planning. The current rate of construction is “only marginally more than the long-term need”, it says.

The challenge is even greater when it comes to producing affordable housing, Boverket says, especially for the young and those entering the housing market for the first time. Almost one in four young Swedes up to the age of 27 are forced to live at home – the second-highest figure since the measurements began.

There are already signs that housing construction is actually slowing down, owing to higher building material prices, rising interest rates and an incipient labour shortage. Construction prices rose by more than 8 percent last year, and there is concern in the industry that war in Ukraine will further affect costs, in turn slowing the pace of building.

There is another fly in the ointment, a consequence of the collapse of Sweden’s governing coalition in November. The new, minority administration was forced to adopt the opposition’s budget, which halted investment subsidies for house building, throwing the construction industry into confusion.

In short, the “Swedish model” for providing people with a roof over their heads is failing. The folkhemmet, or “people’s home”, has not enough homes for its people.

Swedes themselves understand this: in a survey last month, nine out of ten voters said they thought that politicians did not take the housing shortage seriously.

We have waited too long. It is time for fresh thinking and radical action to solve the housing crisis.

David Crouch is the author of Almost Perfekt: How Sweden Works and What Can We Learn From It. He is a freelance journalist and a lecturer in journalism at Gothenburg University

SHOW COMMENTS