Surge in rent prices for German shared student accomodation

Rents for student accomodation in Germany have risen significantly over the past year, as many students returning to university this semester are finding out.

A new study carried out by the Moses Mendelssohn Institute and the real estate portal WG-gesucht.de show that the cost of a room in a shared flat (WG) has risen by an average of €44 to €435 per month, a rise of 11.4% from last year's €391. A WG room is generally considered the cheapest form of accomodation for students, and normally costs up to €200 less than a micro-apartment or anything else on the open market.

The study examined housing offers in all 95 German university cities with more than 5,000 students. In 89 of these cities the prices were seen to have risen, so not just in the big cities. In Erfurt, for example, the average price rose 21.8% to €335 euros for a room. Bonn, Ludwigsburg and Bayreuth also all rose by more than 15%. Heading the list, unsurprisingly, is Munich, where WG room prices have now risen to €700 euros - an increase of 12.9%. Prices in Frankfurt (€580) and Berlin (€550) were only a little lower.

There are strong regional variations, with WG rooms in the eastern part of the country less expensive. Chemnitz in Saxony was found to be the cheapest university city, with rooms offered for an average of €250 euros, only a small rise from the €236 average cost last year. Cottbus in Brandenburg was similarly affordable at €300 euros on average (up from €257 in 2021).

To put these price rises in perspective, when the same study was published for the first time in 2013, you could get a WG room in Berlin for an average of €335 euros, and in Munich it would set you back €499.

According to Stefan Brauckmann, managing director at the Moses Mendelssohn Institute, talking to press agency dpa, the strong price increase in 2022 is the result of a catch-up effect in the aftermath of the COVID-19 pandemic.

"People are making moves they previously put off, returning to studies after dropping classes during the pandemic, or even coming to Germany for semesters abroad that were previously deferred. With a higher than normal number of students seeking accommodation, the student rental market is experiencing high demand. For two years, the corona pandemic caused prices to move sideways for new rentals, but this is now ending," he said.

He said he was also not optimistic that price rises were not set to rise even further. Most of these prices have not taken into account the new costs of energy consumption. Wen these bills come in, prices are likely to be adjusted upwards again for the summer semester next year.

The nationwide average figure from the study are above the flat-rate housing allowance that students can receive through the Federal Training Assistance Act (Bafög), albeit this rate has just been increased from €325 to €360. In 59 of the 95 cities examined, prices for a WG room are more than this, accounting for 64% of all enrolled students.

Suppliers of low-cost housing, often suitable for student accomodation, are holding back from pressing ahead with new construction, given the surge in construction costs over the past year and the higher costs of borrowing. Builders are waiting for news on a subsidy programme - Junges Wohnen - announced recently by Klara Geywitz, the new Federal Minister of Building, which Geywitz says will be ready by 2023.

The programme is said to be in the three-digit millions, with the money being used to create additional affordable living space not only for students and trainees, but also for police trainees. The potentially ambitious program is to be developed with private enterprise (and not just, as in the past, in close co-operation with student unions) and is expected to run until 2026.

Michael Vogt, chairman of the nationwide Federal Micro Living Association, says conditions for student housing must be improved if new supply of low-cost student accomodation is to come on stream. By targeting expansion in the sector, more capacity in the normal housing market would be freed up, thus meeting wider social needs, he says. Developers of student housing often lose out when land is allocated by planning authorities based on the highest price. And, he says, rents could be significantly lowered if university cities would make land available to investors on a leasehold basis, rather than freehold.

At the end of 2021, there were around 66,100 beds in private student housing properties in the 30 largest Germany university cities, according to Savills. The private supply has almost quadrupled in the last ten years and around 16,300 beds are expected to be added over the next three years.