During a government survey in the German Bundestag on December 4, 2024, politician Caren Lay (Left Party) claimed that rents had never risen as sharply in the history of the Republic as they did during the term of the previous government under Chancellor Olaf Scholz. The claim turns out to be mostly true.
Record rents in metropolitan areas
Caren Lay refers to the answer to her parliamentary question for the statement. She asked which ten cities and municipalities, to the knowledge of the German government, had seen the largest percentage increase in first-time lettings and re-lettings in the past year.
The corresponding answer from the federal government shows that the highest rent increases from 2022 to 2023 were in Potsdam and Berlin. Here, the prices per square meter rose by 31.2% and 26.7% respectively. Lay’s office is not aware of any higher annual rent increases. The German government’s primary source is data from IDN ImmoDaten GmbH on apartment advertisements from over 120 real estate portals and newspapers.
The Federal Institute for Research on Building, Urban Affairs and Spatial Development (BBSR) uses this data to calculate the average asking rents (net cold rents), to which Caren Lay refers. It should be noted, however, that apartments in the affordable rental segment may be underrepresented in this data source.
Rising rental prices and their causes in Germany
However, Caren Lay’s statement does not only refer to rent increases in individual cities, but in Germany in general. The Federal Statistical Office Destatis lists the development of net cold rents since 1995. This net cold rent is understood to be the classic cold rent, i.e. the payment to the landlord for letting the apartment without ancillary costs. It is clearly evident that net cold rents have risen steadily over the last 30 years. For the development of rent in all federal states, a similar trend has been observed since 2005.
According to Prof. Dr. Tobias Just from the Chair of Real Estate Management at the University of Regensburg, there are three main reasons for this rental price trend.
Firstly, Germany has built too few apartments, even though demand for housing increased between 2010 and 2022 due to rising incomes for the most part. Tobias Just also sees immigration as a factor in the housing shortage. Asylum seekers usually first settle in major entry-point cities such as Munich, Frankfurt, or Berlin, which intensifies pressure on already tight housing markets there. These short-term factors are further exacerbated by long-term structural shifts resulting from ageing. “Older people now tend to live alone in apartments that they may previously have shared with two, three or four people,” says Just.
The combination of insufficient construction, growing demand, and long-term structural shifts has led to a persistent housing shortage and rising rents.
As a result of these developments, average rents in Germany have been reaching new highs year after year. And this, despite Olaf Scholz having spoken of affordable housing for all citizens before taking office. The key question, however, is whether the percentage increase in rents from 2022 to 2024 is also the highest on record. Figures from the consumer price index for net cold rents between 1995 and 2024 provide insight into this. The year 2020 (CPI=100) serves as the base year for the comparison with all other years.
Consumer price index as a basis for assessment
Destatis tracks the average price development of all goods and services for private households in Germany using the consumer price index (CPI). The calculation of the CPI begins with an imaginary ‘basket of goods’, which is filled with various consumer products and services according to a specific weighting scheme. Goods and services that people in Germany spend more money on are represented more heavily in the basket, reflecting their greater share of consumer spending. The CPI ultimately measures the change in the cost of this basket compared to the previous month or the previous year.
Among the items in the basket, net cold rents in Germany are represented as rent indices. However, Destatis has only recorded rent indices since 1995. Caren Lay, in her statement, refers to the ‘history of the Republic’, implying that values dating back to 1949 should be included in the analysis. The consumer price index table from 1995 to 2024 also shows that rent increases in the years 1995 to 1997 and 2022 to 2024 were larger than in other years.
Index of net cold rent, Source: Destatis, 2025.
Average net cold rents have increased by 5.9% over the period from 1995 to 1997. This increase is even potentially higher than in the period from 2022 to 2024 under Olaf Scholz’s government, although the actual effects of government actions cannot be precisely determined. From a purely mathematical perspective, the increase in rents from 2022 to 2024 would be lower (4.2%) as from 1995 to 1997 (5.9%). Caren Lay’s office confirmed this limitation of the statement after an inquiry: “According to this report, the only year-to-year increase that was as strong as in 2024 occurred between 1995 and 1996.”
In the end, it all depends on the location
The percentage increase in rents at the national level, of course, does not rise as sharply as in individual large cities, which Caren Lay refers to. According to Tobias Just, exceptions can mainly be found in structurally weaker regions.
“Therefore, one can say that it is not a nationwide problem, but it is indeed a phenomenon of larger urban centers,” says the real estate expert.
Conclusion
Caren Lay justified her statement primarily with record rents in metropolitan areas like Berlin and Potsdam. While this indicates a sharp rise in rents, it reflects only local trends, not nationwide developments. She also cited long-term data from the Federal Statistical Office, which does not cover rental trends before 1995. Therefore, her claim that rents under the current government rose more than ever before cannot be fully supported.
In short, we can affirm that Caren Lay is correct in stating that rents in Germany, particularly in urban areas, have been rising. However, a similar sharp increase occurred between 1995 and 1996. Her claim that rents have never risen as dramatically in the history of the republic as during the current coalition government is mostly true. A more precise statement by Lay would have been that rents during Olaf Scholz’s term have risen as sharply as they have not in the past 25 years.
RESEARCH | ARTICLE © Felix Giltmann and Julian Dak | Jade University of Applied Sciences, Wilhelmshaven, Germany
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