Dhe larger cities and their surrounding areas will continue to be the preferred places of residence of citizens in Germany in the future. The pressure on the housing market in the cities is even likely to increase again after a pandemic-related break. This is the result of a survey by the auditing company PwC among construction and rental companies that WELT has.

After all, 63 percent of the major landlords surveyed see “no increased trend in moving” to suburban regions. 34 percent observe a trend towards migration from the city, but not to rural regions, but rather to the immediate outskirts.

“Urbanization continues,” says Florian Hackelberg, co-author of the PwC study and expert in real estate management at the Holzminden University of Applied Sciences and Arts. “There are still more jobs being created in the service sector. This is an overarching trend that will overshadow short-term internal migration tendencies or the effects of the pandemic in the long term, ”Hackelberg continued. “The international immigration of workers to the metropolitan areas is also likely to increase again.”

Real estate companies continue to rely on metropolitan areas

The housing companies and project developers surveyed by PwC have a more business-oriented view of demographic development and migration in metropolitan areas. You have to overlook a planning horizon of several years or even decades and weigh up whether the apartments you rent or build today will still be in demand in the future – in what location, in what size and with what equipment.

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The answer to another question in the PwC study allows a clear conclusion here: Large landlords prefer to expand their portfolios in metropolitan areas. This statement gave it 2.6 out of three points. Construction projects in “suburban regions”, i.e. on the outskirts, follow directly behind with 2.2 out of three points.

Source: WORLD infographic

In rural areas, on the other hand, only a minority are considering new apartments (1.2 points). “Our customers continue to notice the rapidly increasing demand for living space in metropolitan and metropolitan areas,” says real estate expert David Rouven Möcker from PwC Germany. “That has apparently not changed with Covid-19.”

Rental prices in metropolitan areas continue to rise

Demographers and real estate market experts have repeatedly speculated that because of the pandemic, many citizens could move from the urban narrow to the surrounding area or even to more distant rural regions. In fact, the statistical offices have been measuring a negative internal migration balance for about five years, i.e. more emigration than immigration from the cities to the surrounding area. However, by the time the pandemic began, this was exceeded by immigration from abroad, so the urban population increased overall. If the companies surveyed by PwC are correct, this will be the case again in a few months or next year at the latest.

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The experts at the Federal Institute for Building, Urban and Spatial Research (BBSR) are also more cautious in their long-term forecasts with regard to the effects of the pandemic. In a large-scale demographic study, the Bonners expect Germany’s population to shrink only slightly to just under 82 million people by 2040. Within the Federal Republic, however, the emigration from structurally weak rural regions would continue.

Source: WORLD infographic

The result: “In particular, economically strong cities and their surrounding areas as well as some rural regions will continue to grow.” The rising rents are also a signal. Hamburg alone recently reported an average price increase of 7.3 percent since 2019 in the new rent index – despite the housing campaign.

Tenants want larger apartments because of the pandemic

The pandemic even has an indirect effect that increases the demand for space on the urban housing market. According to the PwC survey, landlords are seeing increasing demands from tenants on their apartments. More than half of the companies stated that they wanted larger apartments, and 46 percent of them recorded requests for a separate study. The requirements for a well-functioning workstation in the home office are growing – and will even increase the demand for space in cities.

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Although this wish will be difficult to realize in the still tight urban housing markets, PwC expert Möcker points out: “In inner-city locations, moving to a larger apartment with more space for the home office is rather unrealistic with rising rents,” he says . “You may be able to revise the floor plans of some apartments at one point or another.” But basically the trend towards home office “will tend to lead those interested to orientate themselves towards the outskirts.” But also not to the wide open country, to the Uckermark or in the Westerwald, even if there is broadband internet there. “Cities like Berlin are still exciting places,” says study author Hackelberg.

Source: WORLD infographic

Urbanity is sought, new houses and apartments are in demand. According to the coalition agreement, the federal government wants to ensure that 400,000 new apartments are built every year, especially in metropolitan areas. If you look at the PwC study, that already seems completely unrealistic.

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The desire for houses in the country is increasing

Because of sluggish administration

Demographics, pandemics and labor market effects are creating a growing problem in new residential construction. There is a lack of material and capacity in the building trade, and that with rising prices. “More than every fourth respondent wants to postpone construction projects because of the current high construction costs,” state the PwC experts. 50 percent of construction companies and 60 percent of property owners assume that this will cause residential construction to slow down in the next three years. So the pressure remains high and the queues to view apartments will be longer again.

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