Housing search tense - rent freeze extended

The development of rents has clearly decoupled from the development of property prices over the last two years. In many large cities, the search for housing is tense. By extending the rent freeze, politicians hope to counteract this trend.

The imbalance between supply and demand is currently particularly evident in Berlin. In the past two years, asking rents for existing flats have risen by an average of 9.1 per cent. While a square metre still cost 12.18 euros in April 2022, flat seekers now have to pay 13.29 euros. There have also been attempts in Munich in the past to slow down the rise in rents - so far without success. Rents in Munich are by far the highest in Germany. In the past two years, average asking rents have risen by 8.0 per cent to 18.58 euros per square metre.

In the other major cities, the price curve is somewhat flatter. In Hamburg, asking rents have risen by 5.1 per cent. At EUR 13.99, the average price per square metre is only just below the EUR 14 mark. In Frankfurt (EUR 14.07), this was recently exceeded after an increase of 3.3 per cent.

The rent freeze was introduced in 2015 to limit sharply rising rents. It was due to expire in 2025, but has now been extended until 2029. This means that rents for new lettings and re-lettings in tight housing markets may only be ten per cent higher than the local rent. New buildings and extensively renovated flats are exempt. The rent freeze applies in 415 German cities and municipalities.

The rent freeze is the subject of controversial debate. Depending on the political orientation, the rent freeze is seen as an obstacle to investment in housing construction or criticised as insufficient to stop the rise in rents.

Conclusion: Due to the recent sharp fall in property prices, in some regions it is worthwhile for people who are actually looking for a rental flat to expand their search to include purchase offers.

(Photo: Sylabo, Pixabay)