Asking rents rose significantly faster last year than they did last year – by almost a third in one city. The high increases are likely to continue.

Anyone who is currently looking for a rental apartment in Rostock has to pay significantly more than a year ago: As data now published by the German Economic Institute (IW) shows, the asking rents in the city on the Baltic Sea with a population of 200,000 are from September 2021 to September 2022 skyrocketed by almost a third. The top value in Germany.

However, the Rostock increases are not an exception. Rents rose last year in 394 of 401 German administrative districts and urban districts, by an average of around six percent. In the north of the country in particular, growth regularly exceeds or approaches the ten percent mark. In a time of expensive energy and general inflation, tenants have to pay significantly more for their apartments.

Asking rents record the rents that providers charge for new rentals. They don’t signify degrees yet, but show the direction. Interested parties can only rarely negotiate rents.

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According to IW, the main reason for the rent increase is the increased demand. Higher mortgage rates and inflated real estate prices have made home ownership unaffordable for many people. You are now looking around the rental market to see what is driving prices there.

“It shows that the momentum is increasing,” said IW real estate expert Michael Voigtländer. People were increasingly looking to rent, while some landlords were charging higher rents, apparently because of inflation. In addition, there are catch-up effects in favorable rural regions.

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DZ Bank and the Association of German Pfandbrief Banks have also recently observed rising new contract rents. DZ Bank believes that the reason for this is the immigration of many refugees from Ukraine. A high demand for affordable housing meets falling vacancies in the cities.

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After rents rose the most in the southern half of the Federal Republic for a long time, they have now shot up, especially in the northern half: with Mecklenburg-Western Pomerania (increase of 10.3 percent), Brandenburg (9.1 percent) and Berlin (8.3 percent). ), the top three federal states are all in the north-east of the republic. Their western neighbors Bremen (7.6 percent), Schleswig-Holstein (6.6 percent) and Lower Saxony (6.2 percent) also exceed the national average.

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Rents also rose in southern and central Germany, but less than in the north: Bavaria (up 5.3 percent) and Baden-Württemberg (4.4 percent) are in the lower midfield, Hesse (4.3 percent) and Saxony ( 4.1 percent) at the end.

In the Hanseatic city of Hamburg, rents rose by only 4.3 percent – the lowest value in the north. In Saarland, on the other hand, rents increased by 7.9 percent – the fourth highest value nationwide.

A look at the changes in rents in the districts shows that even neighboring areas have developed very differently in some cases. The IW points out that distortions arise in smaller circles if, for example, an above-average number of expensive rental offers come onto the market. Nevertheless, the patterns allow insights.

Around Berlin, for example, rents rose particularly sharply because apparently more people are fleeing the sharp increase in housing costs in the capital to the surrounding countryside. In the Oder-Spree district near Berlin, where Tesla attracts many employees with its mega factory, rents increased by 9.5 percent, for example. In Märkisch-Oderland to the north, they even rose by 25 percent. The mixture of new industries and emigrants from the capital drives up rents.

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In metropolitan areas, the surcharges for asking rents were limited. In Frankfurt they rose only slightly (1.4 percent), in Stuttgart (2.4 percent) and in Munich (3.5 percent) only moderately. In contrast, they increased sharply in Düsseldorf (5.9 percent), Leipzig (7.8 percent) and Berlin (8.3 percent). Voigtländer: “In very expensive cities, the increases are lower – probably due to a lack of solvency.”

Rents rose more sharply last year than the long-term trend. In all federal states, growth was above the average of the past three years. In the northeast of the Federal Republic even twice as strong.

In recent years, rents have risen less than real estate prices. The prices for single-family and terraced houses have roughly doubled within ten years, as the German Institute for Economic Research recently reported in a study of 97 German cities. At the same time, rents rose by an average of 56 percent. The rise had also weakened recently.

If you also include the ancillary rental costs in the analysis, i.e. pay attention to the total rents, you will get an even higher rate of increase. According to IW, the total rent increased nationwide by an average of almost eleven percent from September 2021 to September 2022 – around twice as much as the asking rent.

“We see that the affordability of rental housing is declining overall,” says Voigtländer. A triad is to blame: “Heating costs are rising very sharply, additional costs are continuing to rise and rents are continuing to rise.”

There is no sign of relaxation on the rental market for the time being. A wave of cancellations has been rolling in residential construction for months: In November, around 17 percent of companies involved in construction were affected by cancellations – after 15 percent in the previous month, as the Ifo Institute reported on Monday. Rising construction prices, higher interest rates and fewer funding options led to a noticeable number of cancellations.

The central association of the German construction industry expects a slump in residential construction: 245,000 apartments are likely to be completed in the coming year, a good twelve percent less than this year. This means that the federal government’s target of 400,000 new apartments per year would again be missed. Fewer new apartments mean less supply, less supply drives up prices.

The German Tenants’ Association called on the federal government to act. Among other things, he blamed an increase in index-linked leases that link rents to inflation and a “hole-y rent cap” for the rise in asking rents. This also affects the stock, said Federal Director Melanie Weber-Moritz. “What is needed is a ban on new indexed rents, a cap on indexed rent increases in existing buildings, an applicable rent brake and the punishment of usury.”