Housing market: Federal Statistical Office raises the alarm

Mila March 31, 2023

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On average, German tenants spend more than a quarter of their income on housing. In 2022, the approximately 19.9 million main tenant households spent an average of 27.8 percent of their income on rent, as the Federal Statistical Office announced on Friday. For the approximately 6.6 million households that rented their home in 2019 or later, the burden was particularly high at 29.5 percent. For comparison: Of the approximately 2.7 million who signed their contract before 1999, the figure was 26.8 percent.

“The rent burden, especially for households with low incomes and in the big cities, is dramatic,” commented the scientific director of the Institute for Macroeconomics and Business Cycle Research (IMK), Sebastian Dullien, on the development. “It is a warning sign that the proportion of income that has to be spent on housing costs has continued to rise in recent years.” For low-income earners, the rent burden is even more than 40 percent of income on average.

Around 1.5 million tenant households even have a rent burden of 50 percent or more. Around 1.6 million spent between 40 and 50 percent of their income on gross rent. Overall, 16 percent of the tenants had a burden of more than 40 percent. One-person households in particular have to shell out a large part of their money for housing. In large cities with more than 100,000 inhabitants, it is particularly expensive for tenants: 28.9 percent had to be paid for the gross rent. In small towns or places with up to 20,000 inhabitants it is 25.9 percent.

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“The problem of the housing shortage is likely to worsen in the coming years,” warned IMK researcher Dullien. “Residential construction is currently in free fall due to increased construction prices and higher interest rates from the European Central Bank.” At the same time, almost a million more people are now living in Germany than was expected before Corona for 2023, mainly due to refugees from Ukraine. Many of these people should stay here. “Since housing was scarce even before Corona, this exacerbates the housing shortage,” said Dullien.

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