Rental prices are continuing to rise, while purchase prices for condominiums and houses are currently stagnating. The simple reason: there are fewer and fewer rental flats on offer, while demand is high. The situation is particularly tense in major German cities.
It is becoming increasingly difficult to find a rental flat in major cities. Compared to the beginning of 2022, 27 per cent fewer rental flats were on offer in the seven largest German cities in the second quarter of 2024. In Leipzig, the number of advertised rental flats has even halved. Nationwide, 18 per cent fewer flats were advertised than two years previously. At the same time, demand remains high and the situation on the housing market continues to worsen. This is shown by the IW Housing Index for the second quarter of 2024.
Those who want to buy a flat instead of renting have better prospects: The number of condominiums for sale has risen by two thirds compared to the beginning of 2022. The number of detached and semi-detached houses for sale has even doubled. However, although supply has risen sharply, demand remains subdued. The reason: purchase prices are still relatively high - as are the financing costs.
"The fact that potential buyers are so reticent shows how great the financial burden of financing is," says study author and IW property expert Pekka Sagner. "Housing must become more affordable - targeted state subsidies are appropriate." This would also relieve pressure on the rental market: anyone who actually wants to buy their own home but is currently unable to do so due to the high financing costs is involuntarily living in a rented flat. Part of the solution is new construction, especially in urban centres.
Forecasts by the EUROCONSTRUCT research group, which includes the ifo Institute, show that the situation will not ease any time soon. The number of completed flats will fall across Europe. At 1.6 million, this figure will be 8.5 per cent lower in 2024 than in 2023, while a decline of 15 per cent is expected for Germany.
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