Precarious situation on the housing market: students can hardly afford to stay

The pressure on the small apartment market is growing. Finding cheap accommodation is becoming more and more difficult – especially for prospective academics. Studying in Munich or Leipzig? A price comparison anticipates the decision to a certain extent. This is also an opportunity for cities.

First comes the joy of a study place, then the disillusionment: Living is increasingly becoming a real luxury for students. An affordable place to stay can hardly be found, write the Institut der Deutschen Wirtschaft (IW) and the financial services provider MLP in their student housing report for 2020.

The analysis of housing costs in 30 university cities provides surprising insights into this particular segment of the housing market. Because it shows that the situation in the lockdown has become even more precarious. Student housing rents have increased in 29 of 30 university cities. In just three cities, the housing surcharge in the maximum student loan rate covers the costs of apartments that are smaller than 40 square meters and are close to the university. In Munich, that's just enough for 15 square meters of cold – that's even one square meter less than the study authors had determined last year.

On the rent scale for student stalls, Munich is and will remain the undisputed leader. A student now has to pay 724 euros for an apartment here. In the second quarter alone, the price rose again by 24 euros. Freiburg comes in second place with 550 euros. Frankfurt and Heidelberg share third place with 508 euros each.

The university towns of Bochum, Tübingen and Jena made particularly big leaps upwards – however, the rents here also come from a lower level. Meanwhile, rental prices for student apartments in Berlin have fallen, and are at least 14 percent cheaper – which the authors attribute solely to the rent cap that has been introduced: "This only apparently relieves the housing market, which is illustrated by the supply situation analyzed for the first time this year. In Berlin the offers have decreased by almost 30 percent in the last six months – by far the largest decrease of all locations. "

According to the study, the cheapest places to live are in Magdeburg and Leipzig. The rents here are record-low 245 and 275 euros. In addition to the pure rental costs, the study also takes into account ancillary living costs of 20 percent, so that the prices shown are rents including heating.

The rush for cheap housing is increasing

According to the analysis, developments on the student housing market reversed over the past year. As the authors write, at the end of 2019 it still looked "as if the development of steadily rising rents had stopped". Apparently, Corona has now worsened the situation for students. Many would certainly have expected the opposite, that the market would relax because of the online semester, they say. Because the rush to the small segment of cheap housing has increased, the opposite is the case. "One explanation for the corona-related increase is that the demand gap created by the online semester has now been closed by other tenant groups – in particular from households who would otherwise rather ask for other apartments without the Corona impact on their income situation," says the real estate expert at the IW, Michael Voigtländer.

This creates a doubly difficult situation for students. The rents have risen, at the same time the income situation has deteriorated, because many have lost their part-time jobs due to the Corona. Studies have shown that this was the case for more than a third. Because rent is usually the largest block in the student budget, the situation is precarious, the authors write. "If rent costs were difficult to meet for many students before the pandemic, they have now become more and more unaffordable."

Many students cannot do without additional income because the housing supplement of 325 euros per month included in the student loan is almost nowhere in the 30 cities examined for renting a classic student apartment. This is only the case in Magdeburg, Leipzig and Aachen.

Low rental prices as a locational advantage

The situation is made even more difficult by the fact that state aid for students is sometimes only temporary. The current question is whether politicians have set the right priorities as part of their Corona economic stimulus package, says MLP boss Uwe Schroeder-Wilberg. "The emergency support provided was important, but at the same time only a lifeboat for short distances – and one in which not everyone has found a place. We need significantly more investment in our young academics – in times of crisis and beyond."

In addition, from the authors' point of view, the differences in housing prices also offer opportunities. "For example, university locations can use cheap rents as a location advantage in terms of regional politics." For this, however, "the necessary prerequisites would have to be created through further infrastructure measures; also in order to be an attractive place to work and live after graduation".

There is a ray of hope in this year's special evaluation of the study: the prospects for young academics improve after they enter professional life. Satisfaction with housing is therefore high among students under 30 and even better with age. The reason is obvious: Their income is developing significantly better than that of young people who have not studied.