Rents rise more strongly than property purchase prices

The residential market is experiencing a trend reversal: While prices for flats advertised on real estate portals fell almost everywhere in the second half of 2022, asking rents rose much more strongly.

For many years, the purchase prices for condominiums rose every year. In discussions, the dangers of a real estate price bubble were conjured up. A current analysis by JLL shows: Asking rents are rising much more strongly than asking purchase prices, and not only in the metropolises but also in medium-sized cities.

In the eight metropolitan areas of Berlin, Düsseldorf, Frankfurt, Hamburg, Cologne, Leipzig, Munich and Stuttgart, asking rents rose by an average of 6.3 per cent in the second half of 2022 compared to the previous year. In contrast, purchase prices rose by only 1.6 per cent in the same period. In the second half of 2022, they even fell by 3.1 per cent compared to the first half of the year. Both new buildings and existing flats were considered.

The trend reversal becomes even clearer in a medium-term comparison. In the past five years, asking prices rose by an average of 9.1 per cent per year, while asking rents increased by an average of only 3.7 per cent per year. The analysis cites the growing population as a result of high immigration as the reason. In addition, construction activity is too low to provide relief in the rental housing market due to inflation, interest rate increases and a shortage of materials.

The strongest increase in rents was recorded by far in Berlin. There, the median rent rose by 15.5 per cent year-on-year. The increase was also dynamic in Leipzig and Hamburg. In contrast, rents developed below average in Frankfurt, Munich and Stuttgart.

Excluding the eight largest property locations, rental growth in the independent cities was 4.4 per cent, slightly less than the five-year average of 5.1 per cent. The purchase prices for flats only went up by 0.6 percent year-on-year. By way of comparison: In the past five years, flat prices in the independent cities increased by an average of 10.3 per cent.

(Photo: © Michael Gaida, Pixabay)