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rents are flatlining

Rents Flatlining in European Cities

23.10.19

Rents in major European cities are continuing to level out, even in Barcelona, Berlin and Brussels which have recorded the steepest climb in rental prices year on year, the latest data shows.

This trend is across most European cities, but Amsterdam and Munich are bucking the trend with rents rising fast, according to the international rental index from Housing Anywhere covering the third quarter of 2019.

It says that while a rental ceiling seems to have been reached in the past quarter, the slower growing world economy and political uncertainties, such as the looming Brexit deadline, have made investors on the real estate market anxious for new investments, which in turn, is driving scarcity and pushing rents up even further.

‘Lack of supply is a factor predominantly in the lower price segments, those particularly sought after by students and young professionals,’ said Djordy Seelmann, chief executive officer of Housing Anywhere.

‘While some municipalities are deploying measures to keep rents from rising even further, such as rental caps, they often overlook the real problem which is the lack of supply,’ Seelmann added.

Across all of the cities covered by the index, the biggest year on year rise was in Barcelona, Apartment rents increased by 8.55%, studios by 6.75%, and private rooms by 7.8%. But rents have been levelling out in the city since the fourth quarter of 2018.

The next biggest rise in rents was in Berlin with apartments up by 7.41%, studios by 7.09%, and private rooms by 7.76%. Again, as is the case with Barcelona, these year over year results do not reflect the current trend of prices levelling out, with one notable exception as rents for studios have risen significantly in the past quarter by 5%.

In Brussels rents for apartments rose by 5.42%, studios by 6.81% and private rooms by 7.33%. Once again, this year over year increase was mainly fuelled by climbing rent in the last quarter of 2018 and, at present rents are levelling out.

Political inertia on the matter of boosting the development of affordable housing is not alleviating the housing problem in European cities. Across Spain and in Berlin especially, initiatives to steer the real estate sector toward new investments have come to a halt due to political indecisiveness. Despite initiatives aimed at putting an end to the spiralling prices, estate agencies are warning that the lack of rental properties on offer is only aggravating the situation,’ said Seelmann.

Eleven new cities have now been added to the index; London, Amsterdam, Munich, Stockholm, Copenhagen, Helsinki, Valencia, Florence, Turin, Utrecht, and The Hague. Of these cities, for which a number are known to be very expensive in terms of average rent, Amsterdam and Munich show the biggest increase in rents.

The report says that this is not a surprise, considering that it is a continuation of a visible trend over the past few years. Amsterdam and Munich remain as popular as ever, and current developments, such as the uncertainty surrounding Brexit, are increasing the scarcity in supply even further.

Other already very expensive European cities, such as London, Stockholm, Helsinki, and Copenhagen see their rents increase at more or less the same rate as in the past year. The report concludes that while it is still too early to tell what effect a future Brexit will have on rents in London, a rental ceiling has not yet been reached in the other cities, and will probably not be reached as long as their popularity remains as it is.

 

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