Housing: Study: Rent eats up income in big city districts

Monthly rent now consumes more than a third of average income in many quarters of the seven largest German cities.

Housing: Study: Rent eats up income in big city districts

Monthly rent now consumes more than a third of average income in many quarters of the seven largest German cities. According to an analysis published today by the data service provider 21st Real Estate, the largest mismatch between net income and rental costs is in Berlin.

In the capital, the rents required are high on the one hand and average incomes are relatively low on the other. The company - which is based in Berlin - puts the average cost ratio for the entire city at 32 percent.

The analysis is based, on the one hand, on the evaluation of 271,000 apartment advertisements published online, and on the other hand on income calculations broken down by “micro-locations” in streets and districts. The basis was income data from the market research institute GfK. Although asking rents are not concluded rental agreements, given the great demand for scarce living space, only a few landlords agree to price reductions.

“For newcomers with medium or low incomes, looking for an apartment in the seven A cities is becoming a real torture,” commented company boss Heike Günding.

What was crucial for 21st Real Estate's evaluation was not the absolute amount of rent, but rather the ratio to income: if only millionaires lived on a street, the rental cost ratio would be relatively low, even for very expensive apartments.

Berlin and Munich are ahead in terms of rental cost ratio

Therefore, the Berlin rental cost ratio of 32 percent in the data analysis is just as high as in Munich, although rents in the Bavarian capital are still more expensive on average. However, according to 21st Real Estate, in the particularly expensive micro-locations with a rental cost ratio of over 35 percent, the average annual income of 57,259 euros is significantly higher than in the largest German city. In Berlin, the average annual salary in the corresponding districts is only 40,255 euros.

Stuttgart comes third in the analysis with a rental cost ratio of 29 percent, ahead of Frankfurt with 27 percent. The cheapest metropolises are Cologne with 26 percent and Düsseldorf and Hamburg with 25 percent each.

According to the Berlin company's calculations, even in these cities there are many neighborhoods in which the rental cost ratio is sometimes well over 30 percent. In Hamburg, for example, rent consumes over 37.5 percent of the average income there in almost all streets north of the Elbe in the Central and North districts.

According to 21st Real Estate, the rent burden is still significantly lower in the areas surrounding large cities. Duisburg, for example, is particularly cheap near Düsseldorf with a rental cost ratio of just 13.4 percent.

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