Ifo: Urban rents for new contracts have risen by around 75 percent since 2013 - German City Rents Surge Up to 36%, Ifo Calls for Reforms
Rents in Germany's major cities have surged, with increases of up to 36 percent seen in places like Cologne, Frankfurt, Stuttgart, and Düsseldorf. The Ifo Institute suggests reforms to tackle this issue, as low-income households bear a heavy burden, with nearly half their income going towards apartments costs.
The rent divide is stark: new apartments cost an average of 4.48 euros more per square meter than existing contracts, a 48 percent increase. This disparity is most pronounced in Berlin (70%), Munich (45%), and Hamburg (37%). Since 2013, urban apartments rents in new contracts have soared by around 75 percent. In Berlin, new apartments rents have more than doubled in the last decade. Other cities with increases over 45 percent include Munich and Hamburg.
Ifo proposes lowering construction and transaction costs, expediting approvals, and encouraging affordable housing to improve housing efficiency. However, this rent divide reduces mobility and flexibility in the job market, as people stay in their affordable apartments.
Apartment increases in German cities have put a significant strain on low-income households. To address this, the Ifo Institute recommends policy changes to make apartments more affordable and efficient. The rent divide impacts not only apartments costs but also job market dynamics, highlighting the need for urgent action.
