AUGSBURG (dpa-AFX) - The German Tenants' Association fears a further drastic increase in rents due to the crisis in the construction sector and the lack of hundreds of thousands of apartments. Even in high-price regions such as Munich, rents have risen more sharply than ever before in the past two years, even for existing contracts, Tenants' Association President Lukas Siebenkotten told the newspaper "Augsburger Allgemeine" (Saturday). "The current rent index for Munich showed average rent increases of a horrendous 21 percent compared to the previous rent index, a shock for all tenants affected."

High demand for advice due to rent increases

Siebenkotten reported that tenants' associations nationwide were receiving more and more requests for advice due to massive rent increases. "Tenants are increasingly worried about how they will be able to afford their rent and the ever-increasing energy costs." The federal government must finally act and put the creation of affordable housing at the top of its list of priorities, demanded the tenants' association president. A rent freeze for existing properties, a strict rent brake for new rentals, the punishment of extortionate rents and a ban on index-linked rents are also necessary.

Real estate industry: Rents are rising due to rising costs

The German Property Federation (ZIA) emphasized that construction costs in Germany are higher than in any other European country due to government regulations. "Rents are bound to rise because the cost of providing housing is exploding," ZIA President Andreas Mattner told the newspaper. There is currently a shortage of over half a million apartments in Germany, and this could rise to 830,000 by 2027. "This is becoming an increasingly serious social problem," said Mattner. In view of the high financing costs, he called for a government loan program with an interest rate of no more than two percent.

Housing construction in Germany has been stagnating for some time. The Munich-based Ifo Institute estimates that only 225,000 apartments will be completed in 2024, compared to an estimated 270,000 last year. DZ Bank believes that the number of annual completions could fall even further to 200,000 apartments by 2025. That would be only half as many as the traffic light coalition had planned. Construction Minister Klara Geywitz (SPD) recently expressed optimism. She said that the housing market would probably brighten up at the end of 2024, beginning of 2025.

Experts: construction costs must come down

The German Economic Institute (IW) recently proposed a package of measures to reduce costs in residential construction. Many savings are possible if there is a consensus in politics, administration and business about the importance of housing construction, according to an IW report.

Specifically, the IW sees opportunities for cost savings in terms of fixtures and fittings, especially as simple fixtures and fittings in new builds often exceed the typical standards in existing buildings. According to the report, dispensing with underground garages or basements could also help. Smaller apartments could also reduce the cost of new builds. The public sector could also do something, for example by selling public land more cheaply. Another lever is tax relief. "Suspending the real estate transfer tax for new builds would be compatible with EU law and appropriate to boost new residential construction."

Rise in construction costs and interest rates - uncertainty on the market

Since 2020, both actual construction costs and interest rates on loans have risen considerably. Added to this are the back and forth of recent years regarding the federal government's debt programs and the current budget cuts by the traffic light coalition. Construction companies and experts also repeatedly cite excessive bureaucracy and the constant tightening of building regulations.

Many people are desperately looking for housing, especially in the cities. Property prices have fallen in the past year, but rents have continued to rise in many places. "We assume that rents will continue to rise in the medium and long term, as demand in most regions of Germany will continue to significantly exceed the shrinking supply of new apartments in the coming years," said Roman Heidrich, expert for residential real estate valuations at major real estate agent Jones Lang LaSalle (JLL), at the turn of the year. The excess demand will intensify on the rental market in particular./hgo/DP/nas