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A study by IW Cologne shows that rental prices in Germany are not a major problem

After rents in Germany have increased steadily over the past decade, the Cologne Institute of the German Economy has published a study: Apparently, despite the rising rents, the rental cost burden remained about the same. The German Tenants’ Association sharply criticized the study.

“Housing – the new social question?” is the name of the study published in April of this year by the Cologne Institute for the German Economy (IW Cologne). The work questions whether the rental cost burden on German households is actually as high as previously assumed.

Rent costs increase by 4.3 percent annually

According to IW Cologne, rental costs in the seven major German cities rose annually by 4.3 percent from 2010 to 2018 – in Berlin by as much as six percent. New contracts in particular have become more expensive: New contract rents cost around 14 percent more than existing rents in the years 2016 to 2018, according to the study.

The problem, which politicians like Horst Seehofer (CSU) and tenants saw in this price increase and recognized as a “social question par excellence”, is put into perspective by another number. According to the IW Cologne, not only have rents increased, there has also been an increase in monthly net household income – by a full 7 percent since 2010.

According to the calculations of the study, the rental cost burden on German households has not increased significantly – on the contrary, it is said to have even decreased in some cases for fully employed people.

On average 25 percent of income for rent

Further calculations by the IW Cologne show that the average rental cost burden for tenants in Germany in 2018 was 25 percent – and therefore also below the 30 percent mark for the most expensive new contracts.

According to the study, 34 percent of tenants (this corresponds to around 6.9 million households) spent more than 30 percent of their net income on gross rent in 2018 – but this is not a cause for concern: the number of those affected has barely increased for several years.

The situation is particularly problematic for only the 2.2 percent of the total population, who, as low-income tenants in large German cities, spend more than 30 percent of their income on rent.

The FAZ therefore quotes Michael Voigtländer from IW Cologne with the following statement: “We don’t want to play down the problem, but we don’t see any impoverishment among tenants.”

Immowelt and the tenants’ association see it differently

An outraged comment by Lukas Siebenkotten, President of the German Tenants’ Association, is quoted in a tenant association press release: “The results of the current analysis by the Institut der Deutschen Wirtschaft (IW) on the housing costs of tenant households in Germany do not reflect the reality of millions of tenants contrary. […] If you know that around 10 percent of employees in Germany are marginally employed, it becomes very clear how many people are confronted with rents that are too high. “
According to the German Tenants’ Association, the rental cost burden in the university city of Freiburg is 41 percent.

And figures from the real estate portal Immowelt show: Between 2009 and 2019, the asking rent per square meter in Berlin doubled, in Munich it rose by 61 percent to EUR 17.70 and there were also large increases of around EUR 17.70 in economically strong regions such as Nuremberg 50 percent. Accordingly, those who have a seven percent higher net household income still have to pay significantly more for a new rental contract than they did 10 years ago.

Image Sources: fizkes / Shutterstock.com

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