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Flats more affordable as rents rise slower than salaries

The last time the IW carried out such a study in 2010, the average German household could afford a 92 square-metre apartment on a quarter of their disposable income. Six years later, that figure has risen to 94 square meters.

On the national level, rents have risen on average 10.2 percent since 2010, while after-tax income has risen slightly more, at 11.5 percent.

But regional differences are very clear, with the major beneficiaries living in rural areas, especially the former East German states of Saxony, Brandenburg and Mecklenburg-Western Pomerania.

While three quarters of local districts saw tenants win in terms of spending power, the trend in urban areas has often been in the other direction.

The population of Berlin has most to complain about when it comes to rising rents.

“In Berlin the development is very serious because change is happening so quickly there,” explained IW economist Ralph Henger.

The population of Berlin has risen by a quarter million to 3.61 million since the last study was conducted, placing pressure on the housing market and pushing up rent.

In the capital rents have risen by a remarkable 26 percent over the past six years, well over the national average and significantly higher than in Munich and Hamburg, which have seen rent rises of 14 and 12 percent respectively.

Nonetheless, tenants in all three of Germany’s major cities can afford roughly the same size of apartment on a quarter of the household income – 70 square metres in Munich, 68 square metres in Hamburg and Berlin.

The report finds that in Munich and Frankfurt – two of the most expensive cities for rents in the country – the situation has eased somewhat.

But Munich is still “barely affordable for many families,” said Henger.

“Overall the situation is not dramatic. Without the arrival of refugees last year we would have seen a bigger decline in the situation.”

Only in five percent of administrative districts nationwide are rents higher than 9 euros per square metre, Henger stated.

“As a comparison, €6.90 per square-metre is the average in Germany.”

Two areas stand out for offering the largest homes as a proportion of income: in Dingolfing-Landau in Bavaria or Lüchow-Dannenberg in Lower Saxony, tenants can on average afford a 120 square-metre apartment on a quarter of their disposable income.

Least attractive are the university towns Freiburg, Heidelberg and Würzburg where a pokey 60 square metres is all 25 percent of your spending power will get you.

The researchers are also optimistic that the positive trend will continue and will even hit the big urban centres in the coming years.

“We are expecting an easing of the situation. There has been an increase in building projects. But it takes three to five years  between planning and the completion of buildings,” said Henger.

This map shows the size of apartment in square metres the people of various German districts can afford. Source: DPA

Article source: http://www.thelocal.de/20160815/flats-more-affordable-as-rents-rise-slower-than-salaries