Germany's Rental Crisis: The Burden on Low-Income Households

A study by DIW reveals that poorer German households, especially single parents and individuals living alone, face greater hardships due to rising rents. The housing crisis worsens with declining social housing and limited government intervention, despite efforts to address the issue.

In Germany, rising rental costs are disproportionately affecting poorer households, particularly single parents and individuals living alone, as highlighted by a recent study from the German Institute for Economic Research (DIW). This is occurring amid a looming recession and a significant property market crisis.

From 2010 to 2022, asking rents have soared by 50% nationally, and up to 70% in larger cities, while existing rents rose by 20%. As a result, low-income households now spend a third of their income on rent, compared to a fifth by wealthier families. Single parents and those living alone are vulnerable, allocating about 30% of their income to rent.

The percentage of overburdened households, defined as spending over 40% of their income on rent, has surged from 5% to 14% over three decades, while social housing stock has dwindled. Despite the German government's target to build 400,000 apartments annually, only 294,400 were constructed last year. The DIW advises against broad rent control and recommends targeted support for low-income renters and expanding social housing.