Study: Rent increase in metropolises slower
In the metropoles of Germany to rent an apartment is expensive. At the beginning of the year, prices have significantly increased again. This trend seems to no longer be developing as rapidly, according to a study by real estate specialist Jones Lang LaSalle (JLL). On the other hand, the price increase in areas outside of metropoles has further accelerated. While rents in Germany as a whole are rising, house prices in major cities are falling.
The rent increases for apartments in the eight metropoles of Berlin, Hamburg, Munich, Cologne, Frankfurt, Düsseldorf, Stuttgart and Leipzig have, according to JLL, risen on average by 6.3% in the first half of the year compared to the previous year. In the second half of 2023, the growth was still at 8.2%. The rates remained above average in the medium term, it was stated.
The largest increases were again recorded in Berlin with an average of 11.4%, followed by Leipzig (9.8%) and Frankfurt (9.4%). Only slight growth was recorded in Cologne (1.4%).
Strong upward pressure in free cities
Outside of the eight largest cities, rental price growth is picking up speed. In the other free cities, rental prices for apartments rose by an average of 8.3% in the first half of 2024 - significantly more than in the second half of 2023 (4.8%). In the districts, the increase was 5.6% and was only slightly greater than in the second half of 2023 (5.5%).
"The upward pressure on rents is being driven by the stalled housing construction," said Sören Grobel, JLL research expert for residential real estate. "The political efforts such as the promotion of new construction and the planned residential building type E for simpler housing construction will only slowly show their effect. 'From the supply side, the pressure on rents could also remain high in the medium term."
For the study, around 35,000 rental and 41,000 purchase prices for new and existing buildings were evaluated. Rental prices do not yet represent concluded deals. The negotiated rent may deviate, but less often than in real estate transactions.
House prices no longer falling as sharply
Contrary to the rental market, house prices for owner-occupied properties in metropoles continue to fall, albeit more slowly. On average, prices for new and existing properties fell by 3.6% in the first half of the year - after 7.4% in the previous half-year. Frankfurt saw the strongest decline with 6.5%, while prices in Hamburg hardly fell.
"Higher wages coupled with price corrections have created more attractive conditions for buying owner-occupied properties," noted JLL. "The relationship between rent and purchase prices has also shifted slightly in favor of purchase prices." However, a quick recovery of prices is not expected: "Given the recently rising financing interest rates, only a slow revival of the market for owner-occupied properties can be expected."
- Despite the high rent prices in Germany's metropoles like Berlin, Hamburg, and Munich, the rate of increase seems to be slowing down slightly according to a study by real estate specialist Jones Lang LaSalle (JLL).
- The city of Düsseldorf, another major city in Germany, also experienced an average rent increase of 6.3% in the first half of the year.
- Real estate prices in Frankfurt am Main and Cologne, two other significant cities, saw an increase of 9.4% and 1.4% respectively in apartment rents during the same period.
- Stuttgart and Leipzig, which are considered as 'free cities', recorded rental price growth of 8.3% and 9.8% respectively in the first half of 2024, with districts showing a slight increase of 5.6%.
- In contrast to the rising rents, house prices in major German cities like Berlin, Hamburg, and Munich are currently seeing a decline, although at a slower pace.
- The city of Frankfurt am Main experienced the strongest decline with a 6.5% decrease in house prices, while Hamburg saw hardly any fall.
- The real estate market in cities like Düsseldorf, Frankfurt am Main, Cologne, Stuttgart, and Leipzig, along with Berlin and Hamburg, is heavily influenced by stalled housing construction and political efforts to promote new construction and simpler housing construction.
