A recent study by the German Institute for Economic Research (DIW) Berlin found that the proportion of German households which are "overburdened" by rent costs almost tripled in recent decades.
According to the DIW, a household is overburdened when residents must pay 40 percent or more of their disposable income on rent. The proportion of German households in this position has risen from five percent in 1991 to 14 percent in 2021.
The idea that one shouldn't pay more than 30 percent of their income on rent is considered a best practice for financial stability around the world.
Germans, known for being financially cautious, often treat this guideline as a hard and fast rule.
But given the rise in rent and housing prices, not just in popular urban centres but also around the country, and increasing number of residents in Germany have not been able to avoid paying more of their disposable income on housing for themselves or their family.
Rent brake is not sufficient to slow rising rents
In April, the federal government succeeded in extending Germany's rent brake (Mietpreisbremse) until 2029.
While the rent brake does help to slow rising rents on some properties, it comes with a number of loopholes that have allowed landlords to raise rents on a significant portion of rentals, especially those in newer buildings in popular urban centres.
READ ALSO: Why are Berlin rents soaring by 20 percent when there's a rent brake?
Meanwhile, the number of rental units that qualify as social housing has shrunk significantly, according to DIW.
At the end of the 1980s, there were around four million social housing units. As of 2022 there were around one million.
Also contributing to the rising cost of housing in Germany, is a failure to meet housing construction goals in recent years.
According to Ifo Institute in Munich, Germany will see the housing construction continue to drop in the coming years.
Speaking to ZDFheute, DIW study author Konstantin Kholodilin said, "Housing is developing more and more into a social issue."Â
Low income households are disproportionately affected
Of course, not everyone is affected by Germany's rising rents to the same extent.
The DIW's evaluation found that the growing burden of rising rents essentially levelled off for most households in the early 2000s. But it continued to rise for low-income households.
READ ALSO: 'A new peak' - How high have rents risen in Germany's big cities?
Have you found your disposal income in Germany being swallowed up by rent costs in recent years? How is this having an impact on your life. Share your views in the comments section below.
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