Germany needs more housing

Housing is becoming scarce and expensive. Cities with the highest rents, and how the state is promoting housing development.

Construction in Germany: demand for housing is increasing in the cities.
Construction in Germany: demand for housing is increasing in the cities. dpa

Germany’s major cities have a lot to offer: universities and companies, theatres, museums and leisure activities make them attractive for living and working. That is why apartments in the larger cities are in short supply: according to a recent survey by the Prognos research institute, this already applies to every third municipality. The strong demand is pushing up rents. In metropolitan areas a family has to spend up to 35 per cent of its monthly income to cover rent and heating costs.

These are Germany’s most expensive cities

The most expensive cities – Munich, Frankfurt am Main and Stuttgart – are located in the west of Germany. In the east, Leipzig and Dresden are attracting a lot of people. At the same time a large proportion of housing is standing empty in smaller towns, such as Görlitz, and in rural areas.

How is Germany promoting housing construction?

In order to meet demand, the CDU/CSU and SPD have agreed in their coalition pact to create more affordable housing: 1.5 million new apartments and houses are envisaged. Two billion euros have been earmarked for social housing.

Families that build or buy their own home can apply for a state subsidy known as Baukindergeld. People who invest in the construction of rented apartments pay less tax. The so-called Mietpreisbremse is a type of rent control devised to protect tenants from disproportionately high housing costs. A spectrum of typical local rents is calculated as a basis to limit rent increases.

Why is the Mietpreisbremse being criticized?

The Mietpreisbremse is being heavily criticized. It is seen as bureaucratic and ineffective, because cities themselves decide whether or not they want to apply the instrument. This is why the tenants’ protection associations are demanding a reform of the German tenancy law.

How will new housing be created in cities?

There is little space for new housing in cities. One solution is densification. In this case areas such as rear courtyards, parks and disused industrial sites are converted into development land, storeys are added to residential blocks and attics are extended to create living space. Some cities, such as Berlin and Hamburg, have environmental protection controls on such procedures. These regulations are designed to preserve neighbourhoods from massive changes and gentrification.

Experts are calling on major companies to build housing for their employees. Similarly, communal living projects also have a future, because every second person in Germany lives alone. The idea is to use living space in a better way and combat the isolation and loneliness of elderly people in the cities.

Quick facts
54
per cent

of Germans live in rented accommodation. Only about 46 per cent own a house or an apartment.

27
per cent

of the monthly income accounts for housing costs on average.

44.6
square metres

is the average amount of living space per person.

6.72
euro per square metre

is the average rate that Germans pay for a rented apartment.

2
persons

live in an apartment on average.