Growth of rental rates in Germany reached 40% over the past five years
A recent study by Immowelt Property Search Portal showed that rents on new contracts have increased in at least 80 major German cities over the past five years. Furthermore, in 34 of them this growth exceeded 20%.
Moreover, rents for new apartments advertised in Berlin increased by an astounding number of 42% over the same period. In 2021, tenants in the German capital were forced to pay on new contracts an average of € 4 per square meter more in comparison to 2016.
Below is the list of TOP-10 cities in Germany with the fastest growth in rental rates (2016-2021):
- Berlin + 42%
- Heilbronn + 38%
- Hildesheim + 33%
- Offenbach + 30%
- Kaiserslautern + 28%
- Stuttgart + 27%
- Freiburg + 26%
- Heidelberg + 25%
- Pforzheim + 25%
- Mönchengladbach + 25%
Rental rates also increased significantly in some cities in the south and west regions of Germany. In eastern Germany, rate growth was less significant, with the exception of Leipzig (22% growth rate).
Important to note that during the corresponding period, inflation rate in Germany was 8%. In 75 of the 85 cities surveyed, rental growth outstripped inflation.
As mentioned, the source of this research was the Immowelt portal, which compared figures of the first half of 2016 and the first half of 2021. A wide range of real estate units ranging from 40 to 120 square meters was included in the research, ranging from secondary housing to new buildings.
Rental growth in Berlin
For those who lived or looked for an apartment in Berlin over the past few years, the German capital's leading place in the price ranking is quite expected. Over the past five years, rental prices in Berlin have skyrocketed by 42%. While the average tenant paid € 9 per square meter per month in 2016, in 2021 the average price became as much as € 12.80 per square meter.
According to Immowelt, the skyrocketing rents in Berlin have come "despite the fact that a rent cap has been introduced and the asking rent for regulated existing apartments has fallen since the law went into effect in June 2019." Unfortunately, this could mean even sharper growth or rental rates in the future.
“After the rent cap was lifted in April 2021, there was a recovery effect that is likely to continue in the coming months,” the experts added.
Rental growth in Stuttgart
In the city of Baden-Württemberg, rental prices between 2016 and 2019 jumped by 27%. Five years ago, residents of this city could rent an apartment for € 10.90 per square meter per month. Now, they have to spend as much as € 13.80 per square meter.
Rental growth in Munich
Over the past five years, rents in the Bavarian capital have risen by 24%. The city council recently put forward proposals to curb price growth within the city. The proposed measures may be necessary, as the average tenant can expect to pay rent with rate as high as € 19.20 per square meter per month to live in Munich in 2021, comparing to € 15.5 per square meter in 2016.
Rental growth in Hamburg
In Hamburg, the average rent in five years has grown by 19%, from € 10.50 per square meter in mid2016 to € 12.50 in the mid-2021. The city's real estate market as a whole is very well recovering from the crisis.
Rental growth in Frankfurt
Over the past five years, the average rental rate in the largest city of Hesse has grown by 16% - from € 12.50 to € 14.50 per square meter per month. However, as in Hamburg and Stuttgart, the upward curve has begun to flatten over the past year - possibly due to the COVID-19 pandemic.
Rental growth in Dresden
In the Saxon capital, rental rate have increased by a modest 13% over the reviewed period. This well reflects a larger trend common throughout eastern Germany, where prices tended to remain lower. Even after the rental rate increase, the average tenant in Dresden will pay € 7.90 per square meter per month under new rental contract, comparing to € 7 in 2016.
Rental growth in medium-size cities
With the exception of Berlin, the largest increase in rental prices has been observed in small and medium cities in Germany. Heilbronn in Baden-Württemberg (+38%) and Offenbach in Hesse (+30%) took second and fourth places in the list, respectively, and are gradually catching up with megacities. In 2021, rental prices in both cities exceeded € 11 per square meter per month.
Freiburg (+26%) and Heidelberg (+25%) also entered the top ten most expensive cities in Germany, with rental prices per square meter being € 13 and € 12.5, respectively.
On the other hand, in Hildesheim in Lower Saxony (+33%) and Kaiserlautern in Rhineland-Palatinate (+28%), rental prices remain low, despite a sharp increase of just under € 8 per square meter in both cities.