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17 10 2019

Germans have Misguided Notions about the Housing Market

The housing issue is currently one of the most hotly debated topics in Germany’s politics and media. The housing shortage and the rise in rents and prices have caused the public debate concerning adequate housing policy measures to become increasingly polarised, prompting discussions even of extreme measures like rent caps and expropriations or, in the case of Berlin’s rent cap, their actual adoption. But according to a recent survey, the German population appears to be rather poorly informed about the realities of the housing market.1

Or so the gist of a poll suggests that the Forsa public opinion research institute conducted among 2,000 tenants and homeowners on behalf of the BFW Federal Association of Independent Housing Companies, which had commissioned the survey. Nearly half of the respondents assume, for example, that more than one in four flats in Germany is owned by listed residential property companies – although the actual figure is only 2.2 percent. The misconception may have been caused by media coverage focusing mainly on large housing companies regardless of the fact that the German housing stock is to three quarters in the hands of owner-occupiers and small-scale landlords.
 

Majority of Tenants do Not Consider their Rents Excessive

The German public also appears to have the wrong idea about housing construction. 40 percent of the respondents are convinced that housing cooperatives are the most active developers of rental housing in Germany. Few things could be further from the truth when you consider that housing cooperatives are responsible for merely nine percent of the development of new-build rental flats whereas the bulk of German rental housing is raised by private companies.

Equally interesting are tenant responses to the question whether they find their current rent inflated – which was answered affirmatively by a mere 18 percent. Although the public debate concentrates mainly on ways to limit, freeze or even reverse the growth of rents, the majority of Germans does not seem to take issue with their rent level.
 

Housing Construction Barely Covered by the Media

Another fascinating outcome of the poll is that the overwhelming majority considers housing construction the most effective means to check rising rent rates whereas only nine percent of the respondents have the feeling that the subject is adequately covered by the media. This means that, while the housing policy debate limits itself almost exclusively to the issues of landlord-tenant law and regulation, most Germans seem to understand perfectly well that regulatory measures are unqualified to solve the existing challenges.

This makes it all the more problematic, even if it is probably just a consequence of the misguided public focus, that a more sensible solution approach—meaning increased housing construction—is more or less ignored while the failure to pursue it is reflected in declining new-build construction activities. During the first seven months of 2019, the total number of granted planning permissions dropped by 3.4 percent over prior-year period, and dropped by an actual 4.1 percent in the case of multi-unit dwellings.2
 

1 www.haufe.de/immobilien/entwicklung-vermarktung/marktanalysen/umfrage-deutsche-schlecht-informiert-ueber-wohnungsmarkt_84324_499638.html
2 www.destatis.de/DE/Presse/Pressemitteilungen/2019/09/PD19_365_31111.html