Tuesday, September 21, 2021
Condominiums are getting more expensive
Rents are rising especially in small towns
Demands for affordable housing are getting louder, especially in the big cities of Germany. But according to the IVD housing price index, rents are currently rising, especially in medium-sized and small towns. Nevertheless, association boss Schick does not want to know anything about a “rental madness”.
Rents in Germany’s metropolises rose less sharply in the first half of 2021 than in the previous year, but they rose in medium-sized and small towns. This is the result of the residential price index of the Immobilienverband Deutschland (IVD) among 400 cities and municipalities in Germany, which was made available to the newspapers of the Funke media group in advance. “The rental price dynamic is weakening for the third year in a row, especially in the big cities. Living is relaxing. Wherever there is construction, there is relief on the rental housing market,” IVD President Jürgen Schick told the newspapers according to the preliminary report.
According to the housing price index, the rent increase for existing apartments weakened by 0.1 percent and was now 2.7 percent for apartments of medium quality. In new buildings, rents rose by 3.2 percent just as much as in the previous year. Nationwide, the new contract rent per square meter cost around 8.55 euros for existing apartments and 11.30 euros for new apartments.
While the price increase in the large cities slowed down with a plus of 2.1 percent in the inventory (2020: 2.9 percent), the rents, however, fell by 4.1 percent, especially in medium-sized cities with up to 100,000 inhabitants (2020: 3.4 Percent) and in small towns with up to 20,000 inhabitants by 5.1 percent (2020: 3.1 percent). However, IVD President Schick does not see a rental price explosion in the smaller cities. “I can’t see a so-called rent madness when rents rise below the general rate of price inflation.”
Munich is the front runner among the metropolises
According to the residential price index, buyers of condominiums have to invest significantly more money. Existing apartments with an average quality of living were sold nine percent more expensive in the first half of 2021 than in the same period of the previous year. In the seven largest cities, prices even rose by 10 percent. Nationwide, the square meter costs an average of 2,550 euros. The front runner among the metropolises is Munich, where the square meter for a medium-sized apartment in existing buildings costs around 6,800 euros.
Single-family houses achieved an increase in value of 7.6 percent, terraced houses even by 8.4 percent. “The desire for their own four walls was strengthened by the pandemic. What is new, however, is the willingness of buyers to move beyond the city limits into the surrounding area and also to more distant regions,” said IVD President Schick according to the preliminary report. In order to promote home ownership, he calls for an allowance for owner-occupiers in the real estate transfer tax as well as an expanded guarantee program from the state credit bank KfW and a new child benefit.