Rental prices at German university locations continue to rise sharply

With A-levels in hand, a summer of boundless freedom behind them and fresh energy, many begin a new chapter in their lives in October – university. For most, studying means finally engaging with subjects that interest them, being able to sleep through a lecture without getting a mark against them and – of course particularly important – their first own flat! It could be so wonderful, were it not for one problem: the rental madness at German university locations. The recently published Student Housing Report 2019 by financial services provider MLP in cooperation with the Institute of the German Economy (IW) clearly shows how dramatic the current situation is. 

The precarious housing market situation in German major cities is a common topic in the media. Reasons include, amongst others, the supply being insufficient for demand, which results from population growth and low construction activity. According to MLP, students are particularly disadvantaged in this competition. This is because they often do not have a fixed income and offer landlords no long-term perspective. Thus, as interested parties for small flats near universities, they have lower chances compared to financially more secure applicants.

The report, which consists of rental market analyses by the IW and consulting expertise from MLP, examined the housing situation for students at 30 German university locations. For clear comparison, they used a model flat of 30 sqm built in 1995, which is located 1.5 km away from the respective university and has a fitted kitchen. In Munich (€717), Stuttgart (€542) and Frankfurt am Main (€505), the monthly warm rent was particularly high. Students got away most cheaply in Bochum (€287), Leipzig (€278) and Magdeburg (€251). 

The report paid particular attention to the price development of recent years. For the calculation, a special system was used to exclude other factors from the development. According to this, rents in Berlin and Munich rose most strongly at over 6% annually. However, this was nothing new for the major cities. It was different in Darmstadt, Frankfurt and Konstanz. The average rent price increase in these regions for the period 2010 to 2019 was not above 4%. However, the increase from 2018 to 2019 was more than twice as high as the average. Darmstadt is the leader, where the nine-year comparison showed an increase of 3.4%, but the last year recorded an increase of 8.3%. Causes included, amongst others, the large number of single-family households (over 50%) and the ineffectiveness declaration of the rent price brake there. 

According to the report, 84,000 more people are studying nowadays than in the 2008/09 semester. Düsseldorf, Berlin, Hamburg, Stuttgart and Cologne recorded particularly large increases in student numbers. In contrast, the number at East German locations even declined in some cases. A larger number of students means greater demand for affordable housing. Since this is only slowly catching up, such large rent price increases are a common consequence. 

For the vast majority of students, their annual net income has either remained the same or even stagnated. For this reason, compensation with the price development on the housing market was no longer possible. The government responded to this with an increase in BAföG amounts from the coming winter semester. The monthly subsidy amount for students not living with their parents increases, in the case of a maximum supplement, from €250 to €325. If one assumes the presented model flat, these payments cannot even cover the entire rent price. A consequence of these conditions is that the number of students with their own private flat has declined by 8.9% to 26.9% since 2003. With around a third of students, an increase in shared flats was recorded. Compared to 2003, 2.8% more students (a total of 25.2%) still live with their parents, would therefore also have to seek a university near their place of residence and are thus restricted in their choice of university.  

As proposed solutions, one demands, on the one hand, the construction of new flats to increase supply and thereby better meet demand. The report calls for relaxing building regulations for the construction of student housing, since these would predominantly only be used during lecture periods and, accordingly, for example, energy requirements would not have to match those of a single-family house. In view of lower housing prices in structurally weaker regions, one should strengthen the universities located there in order to attract more students through incentives. This would also serve the economic engine of the regions, as universities would boost development through new innovations. 

These approaches, however, do nothing for current flat-seekers. All that helps is to keep calm and exercise patience. 

Nabila Rehbein