Locked In - Trapped in the housing market
Residential rents are a key factor in various aspects of location planning and market monitoring. Rising rents can lead to gentrification, which can affect the demography and the character of neighborhoods.
High rents, for example, have a negative impact on the social mix in city districts, which also affects purchasing behavior (purchasing power) and thus sales of certain product groups and product ranges. Market monitoring of rental price developments is therefore important in order to identify trends on the real estate market in good time. real estate market or of locations (stores, branches, etc.) in good time.
Regular updates of the rental price data are crucial here in order to more accurately record and weigh up current market conditions and trends. In cooperation with Real Estate Pilot AG, we evaluate all offer data from their online database GeoMap for specific property data on an annual basis.
Development in and around large cities
In recent years, rental prices in Germany have changed dramatically, particularly in and around major cities, but also in smaller towns and less central regions. There is a wide gap between existing rents and new rents.
Berlin and Potsdam are currently the frontrunners in this trend. Nowhere else have new and re-letting rents risen so sharply. Between 2022 and 2023 alone , asking rents rose by over 31% in Potsdam and by over 26% in Berlin.
For many tenants, this leads to enforced sedentarization, as they can no longer afford the rent if they want to move or the rent exceeds a critical level of their disposable income. As a result, tenants are increasingly "trapped" in housing conditions that are unsuitable for their current living situation.
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Location planning
The level of rents influences where people settle. This influences the distribution of the population and the demand for housing in certain areas. Companies also take rents into account when choosing their location, as high housing costs can make it difficult to recruit workers, but also influence product sales in particular. -
Infrastructure
Rents can influence commuter flows. Higher rents in central locations can encourage more people to move to the periphery, which increases the need for public transport (frequency and mobility). -
Supply networks
The distribution of rental prices can provide information about the need for investment in water, electricity and other supply networks.
Map: Differences between existing rents and new rents
A visual representation of the differences between existing and new rents can help to better understand the extent of the problem.
At this point, we will compare the censorshipus 2022 published average existing rents with current asking rents in € / m², published in cooperation with Real Estate Pilot are collected. The data is available for small areas down to the Micro postal code available.
Existing and new rents in major cities
Berlin is a particularly drastic example of this development. Here, the differences between existing and new rents have increased dramatically in recent years. While existing tenants often still pay rents of EUR 6-8 per square meter, rents for new tenants are often EUR 12-15 or even higher.
What are existing rents and new rents?
Existing rents are the rents that existing tenants pay for their apartments. These rents are often stabilized by long-term rental agreements and statutory regulations and are generally subject to fewer adjustments.
New tenancy rents or re-letting rents, on the other hand, refer to the rents paid by new tenants when they move into a new property or when a new building is let for the first time. These rents are usually significantly higher as they reflect current market developments and demand.
The social problem of high rents
Rising rents have far-reaching social consequences. In many large cities, average earners can barely afford a decent apartment. Families, students and older people are particularly affected. This development is leading to increasing social segregation and the displacement of lower-income sections of the population to the outskirts of the city or to less attractive districts.
The high rents for new tenants exacerbate this problem. While existing tenants often still have relatively favorable conditions, new tenants are forced to pay significantly higher prices. This leads to a widening gap between the rental costs that different population groups have to bear.
"Locked in" on the housing market
Another often overlooked aspect of this problem is the phenomenon of "locked in". This term refers to the situation in which tenants are forced to stay in their current apartments due to high rents for new tenants, even if they no longer meet their needs. This can be particularly problematic for families who need more space or for older people who are looking for an accessible apartment.
This "locked in" situation leads to less mobility on the housing market. People cannot move freely and adapt their living situation to their circumstances, which leads to frustration and dissatisfaction. It also blocks potentially available apartments that would be suitable for other tenants.
Politicians have recognized this problem and are discussing various measures to improve the situation. A central point in the discussion is the rent freeze. This is intended to prevent rents from rising sharply on new lettings. However, there are many exceptions and loopholes that limit the effectiveness of this measure.
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Conclusion
Residential rents are a key indicator of the economic and social health of regions. Monitoring and analyzing them is therefore essential for the planning and development of cities and communities. Regular updates and detailed data help to make informed business decisions and promote sustainable urban development.
