MUNICH (dpa-AFX) - Rising rents are not only affecting city dwellers, but also the economy. "If workers can no longer afford to live in cities, those cities will lose economic power," says Oliver Falck from the Munich-based Ifo Institute. Together with other researchers, he has calculated that new rental contracts in the seven largest German cities are on average 48 percent more expensive than existing contracts. That is 4.48 euros per square meter.
The difference is particularly large in Berlin, at around 70 percent, followed by Munich at 45 percent and Hamburg at 37 percent. In Cologne, Frankfurt, Stuttgart, and Düsseldorf, the surcharges range between 30 and 36 percent.
Since 2013, rents for new contracts have risen by around three-quarters, while existing contracts have seen only moderate increases. "This development threatens to become a social flashpoint and an obstacle to growth for cities," says Falck.
"The rental market is becoming a lottery"
His co-author Simon Krause describes the "scissors" in the housing market in more detail: "While tenants in existing properties benefit from regulated and stable prices, those looking for new apartments pay significantly higher rents. For the same location and apartment size, this can mean a difference of several hundred euros. The rental market is becoming a lottery," he says.
This also has consequences for how much rent weighs on households. According to Ifo, rents for existing properties have remained stable for years at around 35 percent of income for low-income households. For new rentals, this figure has now reached almost 50 percent in large cities. "Given the large difference between rents in existing contracts and new contracts, people prefer to stay in their affordable apartments, even if they no longer suit their living situation. This reduces people's mobility and affects their availability for the labor market," says Pascal Zamorski, another co-author.
The researchers are calling on politicians to take action: they must focus more on the supply side and make more efficient use of the housing stock. Lower costs for construction and purchase or sale, faster approvals, and targeted demand for affordable housing are crucial. Regulating rents may have a dampening effect, but it does not solve the problem of housing shortages.
Other studies have come to similar conclusions
The Ifo Institute is not alone in its analysis. Just a week ago, the Pestel Institute in Hanover came to a similar conclusion. "The stagnation of the housing markets naturally also leads to stagnation in the labor markets, because people can no longer move to take up jobs in other regions," said Pestel chief economist Günther at the opening of the Munich real estate fair Expo Real. "Solving the housing problem is a prerequisite for economic development."/ruc/DP/stw
