German housing crisis: ‘Like winning the lottery!’

Housing is the social issue of the 21st century, German politicians and experts say time and again. And yet there’s no improvement in sight, especially in cities, where affordable housing is in short supply. Oliver Pieper reports

Amir Schraff’s (name changed by the editors) nightmare began on December 24, 2022. On that day, the single father from Afghanistan, who had been living in Germany for more than 16 years, received notice that his lease near Bonn was being terminated because the owner was apparently planning to use it. What followed is something that hundreds of thousands of people in Germany are currently going through: Months of desperate searching for an affordable place to live.

It can involve dozens of unanswered requests, hundreds of other applicants, and seemingly endless queues of people waiting to see an apartment. That is, if you’re lucky enough to be invited in the first place. Only to receive the usual response soon after: “We’re sorry, we’ve chosen someone else!” Schraff, who filed a lawsuit against the termination of his lease, told DW: “The housing situation in Germany is getting worse and worse.”

A look at the figures shows just how dire the situation on the German housing market really is: There is a shortage of over 800,000 apartments in Germany, a figure that is growing. More than 9.5 million people, mostly single parents and their children, live in cramped conditions, according to the Federal Statistical Office.

400,000 new apartments per year — an unattainable objective
Due to high interest rates and construction costs, the German government is far from achieving its ambitious goal of building 400,000 new homes a year, including 100,000 social housing units.

According to the Ifo Institute for Economic Research, around 245,000 apartments were built in 2023, and only 210,000 this year. With the supply of housing in Germany so low, and demand so high, rents are also skyrocketing. And in their desperation, more and more people like Amir Schraff are turning to organizations like the Deutschen Mieterbund (German Tenants’ Association), which campaigns on behalf of tenants.

Peter Kox, managing director of the Deutschen Mieterbund Bonn/Rhein-Sieg/Ahr, told DW: “Almost 50% of people in the large cities of Düsseldorf, Cologne, and Bonn are now eligible for subsidized housing based on their income. These days, it’s not just those on public assistance who are frequently coming to us for help, but also average members of society.”

There is a reason why Chancellor Olaf Scholz says that housing is the most important social issue in Germany: It not only affects single-parent families, the unemployed, students, and refugees, but increasingly the middle class as well. A highly volatile situation.

Kox reports that his organization has now reached a record high of almost 25,000 members, with more joining every day. “People are getting very desperate. In recent years, we’ve seen that it’s not just those with new urgent problems who are coming to us for help, for example with an energy bill that they won’t be able to pay.”

Now, he says, some members who Kox hasn’t heard from for years are coming forward looking for a place to live: “For example, because their landlords is trying to get rid of them so that they can rent out the apartment again at a higher price.”

And then there are those who are left behind in the scramble for housing. People who are forced to camp outside or, as Kox reports, who don’t have stable housing and move from friend to friend or spend the night in public shelters. The managing director of the German Tenants’ Association in Bonn estimates that there are now 3,500 homeless people in his region — ten times more than just a few years ago. His urgent appeal: “Around 30,000 people are expected to move to Bonn in the next 20 years, so we will need 15,000 housing units. And 10,000 of them should be publicly subsidized apartments, if we assume that in a healthy housing market 12 to 14% of all apartments should be publicly subsidized and rent-controlled.”

Renting more common than owning

Germany is a country of renters and is by far the leader in Europe in rentership. More than half of the population does not own their own home; it is the only country in the European Union with more renters than homeowners. But Germany is now paying dearly for its previous political mistakes: the federal government sold thousands of apartments to private investors, while at the same time local governments drastically reduced the construction of social housing.

Matthias Bernt, an expert on housing policy, told DW: “We used to have 4 million social housing units and 15 million rental units, which means a ratio of 1:4. Today we have one million social housing units and 21 million rental units, which means a ratio of 1:21. If you can somehow get a social housing unit today, you’ve just won the lottery.”

Bernt is acting head of the research focus “Politics and Planning” at the Leibniz Institute for Research on Society and Space. He has observed that the housing crisis is most pronounced in large cities and university towns. In the capital Berlin, for example, there are more and more Airbnb apartments. At the same time, the average price for new rentals is around twice as high as that of older contracts.

Loopholes in rent freeze laws

The German government is desperately trying to combat these trends and has now extended the rent freeze until 2029. This means that when a new lease is signed, the rent cannot be more than ten percent higher than a comparable lease in that area. However, there are exceptions for new buildings, extensively modernized, or partially furnished apartments.

In other words, loopholes that urgently need to be closed, says Bernt. “I think that in the short term we really need more regulation of the rental housing market. For example, it is not right that half of the apartments in Berlin are using this trick and being advertised as partially furnished. Landlords get around the rent cap by putting a table and a wardrobe in the apartment and charging exorbitant sums for it.”

At the Day of Housing Construction in Berlin, industry associations also sounded the alarm. They called for an annual sum of €23 billion ($24.5bn) to boost the ailing housing construction sector. At the same time, they warned of a “dangerous scenario in which a crisis in the housing construction sector could trigger a domino effect and cause massive damage to large parts of the economy.” And there is a second argument: urgently needed skilled workers from abroad would not come if they could not find an affordable apartment. And thirdly, the failure of the federal government to keep its promise of building 400,000 new homes per year could push voters to the political fringes. But Federal Economics Minister Robert Habeck and Federal Building Minister Klara Geywitz remained firm and rejected further subsidies. Housing policy expert Bernt recommends looking abroad:

“The strategy of just build, build, build won’t work. The most important thing is that construction is inexpensive and remains affordable in the long term. If you look to Austria or Switzerland, which also have a large rental market, there are certainly models that could be used to create housing for the long term. Vienna is a shining example, where almost half of all apartments are owned by the city. This ensures that housing in Vienna is affordable.”

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