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Germany: Student housing prices rise but low tuition a saving grace

Student housing in Germany is experiencing a long-term price hike, prompted by high enrolment figures, which threatens the country’s status as an affordable destination for learning.

There are fears international students may be crowded out of Germany's increasingly expensive capital. Photo: Unsplash

Germany is the latest of many European nations to exhibit signs of a student housing crisis

According to a report by the German Economic Institute, prices of student housing in major international student cities such as Berlin, Munich and Frankfurt has risen by as much as 67% since 2010.

“A widening gap between demand and supply is pushing prices up”

The capital has seen a rise of 10% in just one year, a development Jorick Beijer, director of student housing think tank The Class of 2020, said will change its international reputation.

“Berlin is beyond the ‘poor but sexy’ image and I believe that students admire the city for its cosmopolitan vibe, superb education and exciting urban spaces. Maybe not so poor, but still super sexy,” he told The PIE News.

Djordy Seelmann, CEO of HousingAnywhere, confirmed that such growth rates have been seen across student hubs in Germany.

“For the larger cities in Germany like Berlin, we are seeing the same reported 10% increase in student housing prices,” he relayed.

For the Dutch platform offering accommodation globally, this rise is unsurprising as “Cities like Berlin, Hamburg and Munich have always been really popular among students and young professionals.”

But there are material changes to the sector, which are resulting in the increases, Seelmann told The PIE.

“At the same time, the supply of furnished housing is increasing, as a response to the growing demand for high-quality, furnished apartments and rooms with more amenities.

“This is in line with the trend that we’re seeing where students look for co-living arrangements that provide additional value such as cleaning and food service. If this accommodation type keeps growing in terms of market share, we can expect the average rental price to keep rising,” he said.

“Real estate developers have mostly focused on ‘luxury’ student apartments”

The sharp increase in housing prices are arguably off-set by low tuition fees, and with many mobile students able to call on larger budgets than their domestic colleagues, some posit that it won’t be a problem for this part of the student population.

But Gerrit Bloss, CEO of Study.EU, said there was a more complex reasoning to his view that international students would suffer more following the price hike.

“It will hurt international students more than locals… German public universities send out their letters of acceptance very late, sometimes only one or two months before the start of the semester,” he explained.

“Flat seekers from abroad are already at a disadvantage for various reasons – but finding affordable accommodation on short notice is even harder. This, of course, also attracts scammers,” Blöss said. 

As well as timing pressure, new arrivals in Germany are increasingly facing stock pressure according to The Class.

“The bigger picture in student accommodation is that a widening gap between demand and supply is pushing prices up,” Beijer said.

The analysts at The Class recently highlighted Denmark as the next northern European nation to experience a student accommodation “crisis”, following the news that students in the Netherlands were forced to camp or live in a refugee centre because the shortage was so dire.

Beijer suggested the solution must come from both public and private purses, rather than an independent approach.

“Maybe not so poor, but still super sexy”

“We see that both domestic developers as international investors are ready to do so. The key to fast-tracking these projects is leadership within local governments that prioritises such developments and overcome regulations that are currently a show stopper,” he continued.

But according to Blöss and Seelmann, some private developers are following the money – and increasing the problem.

“Some universities are actively addressing this, especially private institutions, but their resources are often limited. Real estate developers have thus far mostly focused on ‘luxury’ student apartments,”Blöss said.

And Seelmann pointed out that “property developers and property management companies are remodelling accommodation to meet the quality that is required to attract those tenants that are willing to spend more on housing.”

However, with many cities in Germany offering respected universities and other institutions, along with a reputation for a good quality of life, Blöss doesn’t think international students will be put off by a pricey capital city.

“Price levels in Berlin will continue to rise and might eventually be on par with Hamburg or Munich – although that might take another decade or two. But the city will continue to attract internationals, even if more price-sensitive students might look at alternatives like Leipzig or Dresden,” he predicted.

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