Overall Conditions of the German Residential Real Estate Market
Everyone needs a home. In addition to our basic physiological needs, a roof over our heads is a basic and fundamental human requirement; as well as offering protection and shelter, our home is also, first and foremost, an expression of our personal lifestyle. According to the latest estimates from the Federal Statistical Office, at least 42.0 million apartments are on offer for approx. 82.9 million people.
At the time of the last microcensus (2014), the proportion of owner-occupied apartments came to around 45.5%, with rented apartments accounting for around 54.5%. The vast majority of these apartments are made available by private small-scale providers. In addition to these providers and landlords, the German real estate market features cooperative, municipal, public-sector and church landlords, as well as private-sector professional landlords such as Vonovia. According to the German Association of Professional Homeowners (GdW), the latter provided a combined total of around 4.2 million apartments at the time of the microcensus. Vonovia currently rents out a total of around 358,500 apartments in Germany. This corresponds to around 8.5% of the total supply made available by private-sector professional landlords and to around 1.5% of the total number of rented apartments in Germany.
A large number of major cities and the areas surrounding them are experiencing rapid growth. This is due, in particular, to migration from other parts of Germany and from abroad, a trend that has been accelerated by the influx of refugees from global crisis regions. This is fueling greater demand for suitable and affordable living space in these growing cities and regions, resulting in housing shortages as well as rising rents and prices. Despite an increase in the number of completed developments, new construction is still lagging behind the demand for housing, particularly in the country’s metropolitan regions. On the other hand, other cities and rural regions in various parts of Germany are faced with a dwindling population.
In addition, the German population is becoming older on average, creating major challenges for the real estate industry, particularly as far as senior-friendly housing is concerned.
Awareness of the housing problem, which is reflected in a shortage of available and affordable housing in Germany’s metropolitan regions and in the associated significant increase in property prices on both the rental and owner-occupied markets, has grown considerably in recent years. At the same time, surveys suggest that the prevailing opinion is that policymakers have made the wrong housing policy decisions in the past and that they are still doing too little to combat the problem. This shortage of housing and the development in property prices/rent that comes along with it have created a subjective sense of inequality that pervades all sections of society, with political decision-makers under increased pressure to rectify the situation.
This means that housing providers have to adopt a very sensitive approach that gives due consideration to how the “housing issue” is seen in the public eye, and have to proactively seek dialog with political lobbyists and tenants at local, regional and nationwide level. As the issue affects a whole range of different stakeholders, a balance has to be struck between the demands created by the current societal megatrends on the one hand and the fundamental human need for housing on the other.