Rental rates in Germany are rising faster than real estate prices

According to a recent study by real estate agency Jones Lang LaSalle (JLL), there is currently a growing trend that has never happened in Germany in the past: rental prices are now rising faster than real estate prices.

According to this study, there are a number of factors that may have caused this trend, such as rising interest rates on loans, more and more expensive building materials, and rising inflation. As a result, a high percentage of the German population becomes unable to buy a house or apartment due to its high cost and prefers to rent it out. As a result, the cost of renting is now rising faster than the cost of buying.

This trend is most visible in eight major cities: Berlin, Hamburg, Munich, Cologne, Frankfurt, Düsseldorf, Leipzig and Stuttgart. According to the study, the rent in these cities increased by an average of 6.3 percent in the second half of 2022 compared to the same period in 2021.

While the recent surge in interest rates has pushed down property prices somewhat in many parts of Germany, it hasn’t been enough to make housing generally more affordable. Given the fact that over the past 5 years, prices per square meter have grown by an average of 9.1 percent per year, a slight decrease was not enough to make a significant difference.

Immowelt, German operator of several real estate portals, has calculated that at the moment the average family of three needs at least 5,000 Euros per month (excluding taxes) to get a loan for a 90-square-meter house or apartment in any major German city.

It is worth noting that a similar acceleration in rent growth against the backdrop of a slowdown in the housing market can be observed in Spain.